Sequestration: Documenting and Assessing Lessons Learned Would Assist DOD in Planning for Future Budget Uncertainty
Published: 2015-05-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In March 2013, the President ordered across-the-board spending reductions, known as sequestration, for all federal agencies and departments. As a result, DOD's discretionary resources were reduced by about $37.2 billion over the remainder of FY 2013. The joint explanatory statement accompanying the National Defense Authorization Act for Fiscal Year 2014 included a provision for GAO to review DOD's implementation and effects of the FY 2013 sequestration. This report examines, for the FY 2013 sequestration, (1) how DOD allocated reductions, (2) what effects DOD has identified on selected DOD programs, services, and military readiness, and (3) the extent to which DOD took actions to mitigate the effects of sequestration.
GAO analyzed DOD's FY 2013 budget and execution data and reviewed a nongeneralizeable sample of five types of expenses or investments—such as maintenance, and a selection of weapon systems and military construction projects—based on the magnitude of reductions and possible relation to readiness. For each area, GAO reviewed data on planned versus actual spending and reports on actions taken and interviewed DOD and service officials.
section_title: What GAO Found
paragraphs: To implement sequestration in fiscal year (FY) 2013, the Department of Defense's (DOD) discretionary resources were reduced in approximate proportion to the size of its appropriation accounts, with the largest reductions to DOD's largest accounts, operation and maintenance. The military services' accounts absorbed about 76 percent of DOD's reduction relative to other defense accounts. In contrast to other accounts, such as procurement, DOD and the services had some flexibility to allocate varying reductions to functions and activities funded by the operation and maintenance accounts.
To implement sequestration reductions, DOD took near-term actions to preserve key programs and functions and reduced spending on lower priorities. Many effects that DOD officials attributed to the reductions were interdependent, with some difficult to quantify and assess. Effects DOD identified generally related to:
Costs and spending : Some actions increased costs or deferred spending to subsequent years (e.g., procurement delays to the Navy's P-8A aircraft program resulted in an estimated $56.7 million life-cycle cost increase).
Time frames or cancellations : Delayed or cancelled activities affected some plans to improve military readiness (e.g., the Air Force cancelled or reduced participation in most of its planned large-scale FY 2013 training events, and expects delayed achievement of longer-term readiness goals).
Availability of forces and equipment : Some actions decreased the forces and equipment ready for contingencies (e.g., the Navy cancelled or delayed some planned ship deployments, which resulted in a 10 percent decrease in its deployed forces worldwide).
DOD and the services relied on existing processes and flexibilities to mitigate the effect of sequestration in FY 2013, but did not comprehensively document or assess best practices or lessons learned from their experiences. For example, the services used authorities to reprogram and transfer funds, which allowed them to reverse some initial actions taken to reduce spending. GAO identified some DOD efforts to document lessons learned or best practices related to the implementation of the FY 2013 sequestration, but found them to be limited in scope and not widely shared. Without documenting and assessing lessons learned and best practices, such as strategies for evaluating interdependence of funding sources and programs, and leveraging existing mechanisms to share this information, DOD is missing an opportunity to gain institutional knowledge that would facilitate future decision making about budgetary reductions.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD document and assess lessons learned and best practices from implementing sequestration, as well as leverage existing mechanisms to share these lessons within the services and across the department. DOD concurred with GAO's recommendations.
; or Michael J. Sullivan at (202) 512-4841 or sullivanm@gao.gov .

section_title: Letter
paragraphs: Throughout much of fiscal year 2013, the Department of Defense (DOD)  and other federal agencies faced an uncertain budgetary environment,  including the timing and extent of across-the-board spending reductions  known as sequestration. DOD began fiscal year 2013 under a continuing  resolution that, among other limitations, held funding near the same levels  as in fiscal year 2012. Then, on March 1, 2013, pursuant to the Balanced  Budget and Emergency Deficit Control Act of 1985 as amended by the  Budget Control Act of 2011, the President ordered the sequestration of  budgetary resources across the federal government. Ultimately, DOD  was required to reduce its discretionary budget by about $37.2 billion, or  about 7 percent, over the remainder of fiscal year 2013. Both the law and  the President’s order required DOD to apply sequestration reductions  across all nonexempt programs, projects, and activities including within  operation and maintenance; research, development, test, and evaluation  (RDT&E); procurement; and military construction appropriation accounts.  Consistent with applicable legislation, the order exempted military  personnel accounts. provided some relief from  Although the Bipartisan Budget Act of 2013 sequestration reductions for fiscal years 2014 and 2015, DOD faces a  continued environment of constrained budgetary resources until at least  2023 under current law.operational challenges with constrained resources, the ability to mitigate  risk and to determine how to prioritize expenses and investments will be  paramount.
Pub. L. No. 113-67 (2013). sequestration, such as cancelling or curtailing training for units not  preparing to deploy, postponing some planned equipment maintenance at  its depots, delaying repairs or renovation of facilities, reducing some  weapon system quantities, and delaying system development and  testing. At that time, DOD officials explained that the impacts of the fiscal  year 2013 sequestration would not be fully realized until fiscal year 2014  or later. In June 2014, we reported on DOD’s implementation of an  administrative civilian personnel furlough in response to the fiscal year  2013 sequestration reductions, finding that DOD developed its initial  estimated cost savings for the furlough without excluding pay for those  excepted from the furlough and did not update its estimate throughout the  furlough period. Further, officials at selected sites we visited described  effects of the furlough, such as decline in morale, mission delays, and  inconsistencies and clarification issues with the furlough guidance. We  recommended that DOD update and utilize its furlough cost savings  information as it becomes available in the event that DOD decides to  implement another administrative furlough in the future. DOD partially  concurred with the recommendation.
In addition, in March 2014 we reported on how 23 federal agencies,  including DOD, prepared for and implemented sequestration in fiscal year  2013. We found that sequestration reduced or delayed some public  services and disrupted some operations, and that agencies faced  planning challenges because they lacked sufficient information and  institutional knowledge on how to apply sequestration reductions. We  recommended that the Office of Management and Budget publish criteria  to clarify the application of sequestration reductions across certain  accounts, and direct agencies to record their decisions and principles  used to implement sequestration for potential future use. The Office of  Management and Budget agreed with our recommendations and has  updated its budget guidance, Circular No. A-11 on the Preparation,  Submission, and Execution of the Budget, to address them.related products is included at the end of this report.
The joint explanatory statement accompanying the National Defense  Authorization Act for Fiscal Year 2014 included a provision that we review   DOD’s implementation and effects of the fiscal year 2013 sequestration. Further, the House Committee on Armed Services requested that we  review the implementation and effects of 2013 sequestration on DOD.  This report examines (1) how DOD, including the military services,  allocated fiscal year 2013 sequestration reductions, (2) what effects, if  any, DOD has identified from the fiscal year 2013 sequestration on  selected DOD programs, services, and military readiness, and (3) the  extent to which DOD took actions to mitigate the effects of the fiscal year  2013 sequestration. The report provides an overview of our findings for  each of these objectives. Appendix I provides the results from our  nongeneralizeable case studies of five types of expenses or investments  we reviewed in detail—operational tempo and training (which includes  deployments), maintenance and weapon system support, base operating  support, and a selection of weapon systems and military construction  projects—to represent each type of nonexempt account.
To determine how DOD, including the military services, allocated fiscal  year 2013 sequestration reductions, we reviewed data from a June 2013  DOD report to identify funding reductions among and within the  operation and maintenance, RDT&E, procurement, and military  construction accounts. For the operation and maintenance accounts, we  reviewed data from DOD’s operation and maintenance budget execution  report for the fourth quarter of fiscal year 2013 to identify how reductions  were allocated across subactivity groups for the military services’ active  and reserve components. In consultation with the Office of the Under  Secretary of Defense (Comptroller), we used the operation and  maintenance execution data and DOD’s budget justification materials to  group the 258 unclassified active and reserve components’ subactivity  groups into 11 broad categories of functions and activities, which we used  to identify areas with the largest sequestration reductions. For the  RDT&E and procurement accounts, we reviewed data from DOD’s June  2013 report to identify how DOD and the military departments allocated  reductions across weapon systems within those accounts between fiscal  year 2013 funds and prior year unobligated balances. Similarly, for the  military construction accounts, we reviewed the same DOD data to  identify how DOD and the active and reserve military service components  allocated reductions for major military construction projects between fiscal  year 2013 funds and prior year unobligated balances. Based on  information on the collection and management of DOD’s sequestration- related data that we obtained from interviews with and questionnaires to  relevant DOD officials, we determined that these data were sufficiently  reliable for our purposes.
To determine what, if any, effects DOD has identified from the fiscal year  2013 sequestration on selected DOD programs, services, and military  readiness, we utilized a nongeneralizeable case study approach to review  effects on selected activities, projects, and programs within each  appropriation account. For the operation and maintenance accounts, we  selected 3 of the 11 categories that experienced large sequestration  reductions in 2013 based on our analysis of fiscal year 2013 budget data  and which, according to DOD documents, had the potential for the  greatest impact on military readiness. The operation and maintenance  case studies we selected were (1) operational tempo and training,  (2) maintenance and weapon systems support, and (3) base operating  support. The RDT&E and procurement case study included a selection of  DOD and service acquisition programs for 19 weapon systems that we  selected based on weapon systems that had the highest dollar amount of  sequestration reductions as identified in the June 2013 DOD report and/or  weapon systems with the greatest reported sequestration-related effects  based on our analysis of DOD budget documents and our analysis of  2013 and 2014 budget data. The military construction case study included  projects funded by all service components that experienced sequestration  reductions to their military construction accounts. For all five case  studies, we reviewed program and project data and documentation and  interviewed cognizant officials at the service headquarters-, command-,  and program office-level to identify any effects of sequestration. The case  study findings provide illustrative examples of sequestration effects and  mitigation strategies across the department. While the findings of the five  case studies cannot be generalized to all DOD programs, projects, and  activities, they reflect a wide range of perspectives across the  department.
To determine the extent to which DOD took actions to mitigate the effects  of the fiscal year 2013 sequestration, we utilized our case study approach  to review mitigation efforts and plans for selected activities, projects, and  programs within each appropriation account included in our scope. We  interviewed officials and gathered documentation on actions that DOD  took to mitigate sequestration reductions. Further, we reviewed DOD’s  use of processes and other authorities to re-prioritize fiscal year 2013  funds within and across the operation and maintenance, RDT&E,  procurement, and military construction accounts and compared the  services’ use of these authorities to data from fiscal years 2009 through  2014 to identify any trends. We limited the scope of our data analysis to  prior-approval reprogrammings, which includes certain transfers, given  that the data on these types of reprogrammings were readily available  through the website of the Office of the Under Secretary of Defense  (Comptroller) and could be corroborated with the data provided directly by  that office within existing time frames. Specifically, we obtained that  office’s spreadsheets with data on reprogrammings and compared a  nongeneralizeable sample of randomly-selected data points between the  website and the spreadsheets to assess the reliability of the data. We  found these data to be reliable for the purposes of reporting on DOD’s  reprogramming trends. We also gathered documentation and interviewed  DOD and service officials to identify any efforts taken to gather and apply  lessons learned from their experiences implementing sequestration in  fiscal year 2013 in response to a circular that was revised recently by the  Office of Management and Budget.detailed discussion of our scope and methodology. Appendix III presents  a list of the subactivity groups included within each of our three operation  and maintenance case study categories.
Appendix II provides a more  We conducted this performance audit from April 2014 to May 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: DOD’s Major Appropriations and Authorities for Transfers and Reprogrammings
paragraphs: Each year, Congress appropriates new discretionary funds for DOD  across a number of appropriation accounts with different purposes,  including appropriations for operation and maintenance, RDT&E,  procurement, and military construction, among others. Depending on the  type of appropriation, DOD may have several accounts for each  appropriation type in a given fiscal year. For example, each active and  reserve military component as well as other DOD components has its  own operation and maintenance accounts. Separately, there are  individual RDT&E and procurement accounts for the military services, and  a consolidated appropriation for other defense-wide programs.
Operation and maintenance appropriations fund civilian pay,  deployments, training, and maintenance, as well as a variety of other  activities such as food, fuel, and utilities.
RDT&E appropriations fund contractors and government installations  to conduct research, development, testing, and evaluation for, among  other things, equipment and weapon systems.
Procurement appropriations generally fund the purchase of capital  equipment such as ships, aircraft, ground vehicles, and other items  after their development.
Military construction appropriations fund construction, development,  conversion, or extension carried out with respect to a military  installation, whether to satisfy temporary or permanent requirements,  subject to certain exceptions.
DOD’s appropriations have different periods of availability for new  obligations. For example, operation and maintenance funding is typically  available for incurring new obligations for one fiscal year. RDT&E funding  is typically available for two years. Procurement funding is typically  available for three years, and military construction funding is typically  available for obligation for five fiscal years.
Subject to law and DOD financial management regulations, DOD has the  authority to transfer funds between appropriation accounts and to  reprogram funds within an appropriation account. For fiscal year 2013,  the Consolidated and Further Continuing Appropriations Act, 2013  provided DOD with $7.5 billion in broad authority to transfer funds  between appropriation accounts. Of this amount, $3.5 billion was  special transfer authority for purposes related to overseas contingency  operations and $4 billion was general transfer authority. These amounts  were generally consistent with the amounts of broad transfer authority  that Congress provided to DOD in fiscal years 2011 and 2012. In addition  to its transfer authority and subject to certain limitations, DOD also has  the authority to reprogram funds within an appropriation account. DOD  guidance requires that it seek approval from the congressional defense  committees to reprogram funds above certain thresholds and for other  specific types of transfers or reprogrammings.specifies circumstances in which the department may reprogram funds   This guidance also  without prior congressional approval if the cumulative increase or  decrease of funds is within established thresholds.
section_title: Process and Definitions for Implementing Sequestration
paragraphs: The absence of legislation to reduce the federal budget deficit by at least  $1.2 trillion triggered the sequestration process in section 251A of the  Balanced Budget and Emergency Deficit Control Act of 1985, as  amended, and the President ordered the sequestration of budgetary  resources on March 1, 2013. Following this order the Office of  Management and Budget calculated the amount of DOD’s budget  authority subject to sequestration across its appropriation accounts— known as the sequestrable base—and reduction amounts based on the  annualized amount set out in the continuing resolution then in effect. On  March 26, 2013, the Consolidated and Further Continuing Appropriations  Act, 2013 was enacted, providing different amounts of budget authority  than were provided by the continuing resolution. For DOD, the amount  of nonexempt discretionary resources subject to sequestration in fiscal  year 2013 was about $527.7 billion. This amount reflected DOD’s fiscal  year 2013 appropriations, which included base and overseas contingency  operations funding plus any unobligated balances in multiyear accounts  from prior fiscal years. Ultimately, these resources were reduced by about 7 percent, or $37.2 billion, as a result of sequestration (see fig. 1 below).
The Balanced Budget and Emergency Deficit Control Act of 1985 (Pub. L.  No. 99-177, as amended) required DOD to apply sequestration  reductions evenly at the program, project, and activity level for each of its  accounts. The definition of programs, projects, and activities differs based  on the appropriation account. For operation and maintenance accounts,  the program, project, and activity level was defined at the appropriation  account level, such as the Operation and Maintenance, Navy and  Operation and Maintenance, Army accounts. For RDT&E, procurement,  and military construction accounts, the program, project, and activity level  was defined as the most specific budget item identified in the  Consolidated and Further Continuing Appropriations Act, 2013, classified  annexes and explanatory statements to that act, or certain agency budget  justification materials, and this level of detail would include individual  weapon systems and military construction projects.
section_title: DOD Actions and Guidance for Implementing Sequestration
paragraphs: Prior to and following the President’s March 2013 sequestration order,  DOD took various actions to plan for and implement sequestration.  Initially, in September 2012 the Deputy Secretary of Defense released a  memorandum instructing components to continue spending at normal  levels and not to take steps in anticipation of sequestration. By  December 2012, DOD officials said they had begun actively planning for  sequestration. On January 10, 2013, the Deputy Secretary of Defense  issued an additional memorandum that identified departmental priorities  and provided approved actions for DOD components to take in response  to the uncertain budgetary environment. The memorandum directed  DOD components to prioritize activities such as wartime operations and  Wounded Warrior programs, and instructed components to take near- term actions, reversible if possible, such as imposing hiring freezes and  curtailing travel, training, and conferences. DOD issued further  implementation guidance in the months that followed. For example, on  May 14, 2013, DOD notified managers to prepare to furlough most DOD  civilians for up to 11 days, and on August 6, 2013, DOD reduced the  number of civilian furlough days from 11 to 6. In addition, the military  services issued guidance to their commands and components, in line with  the department’s priorities. For example, both the Army and the Air  Force issued memorandums in January 2013 outlining certain near-term  actions for their commands to take to reduce expenses but stated that  any actions must be reversible to minimize harmful effects on readiness.
Figure 2 provides a detailed timeline of DOD, Office of Management and  Budget, and legislative actions taken to plan for and implement the fiscal  year 2013 sequestration.
section_title: Budgetary Environment in Fiscal Year 2013
paragraphs: DOD faced a challenging budgetary environment prior to and during the  implementation of sequestration in fiscal year 2013 stemming from a  continuing resolution, difficulties in determining the total amount of the  sequestration reduction, and higher-than-expected costs for overseas  contingency operations. For example:
DOD was operating under a continuing resolution from October 1,  2012 through March 26, 2013, when the full-year appropriation was  enacted. The continuing resolution held funding near fiscal year 2012  levels, and limited DOD’s budget authority and flexibility to transfer  funds. Thus, when the President ordered the sequestration of  budgetary resources, DOD had already spent the first five months of  fiscal year 2013 uncertain of its funding level.
In our prior work, we found that DOD faced difficulties determining the  total amount of its funding that would be subject to sequestration, and  consequently the total size of the reduction, because the Office of  Management and Budget’s initial estimates of sequestration  reductions were based on an amount generated by annualizing the  funding available under the continuing resolution in place at the  time. These estimates were ultimately revised based on different  budget amounts provided in the Consolidated and Further Continuing  Appropriations Act, 2013. As a result, DOD did not know the final  amount subject to sequestration until May 2013, which affected its  ability to finalize decisions on allocating funding reductions.
DOD also experienced higher-than-projected costs for overseas  contingency operations than originally planned in fiscal year 2013 due  to changing assumptions, such as the drawdown in contract-related  services in Afghanistan.
section_title: Sequestration Reduced DOD’s Nonexempt Discretionary Resources, Including Unobligated Balances, and the Military Services’ Accounts Absorbed Most of the Reductions
paragraphs: In response to the President’s sequestration order and OMB’s  implementing report, DOD’s nonexempt discretionary resources were  reduced, including those within the operation and maintenance,  procurement, RDT&E, and military construction appropriation accounts.DOD’s use of prior year unobligated balances to meet sequestration  reductions varied by appropriation. Because the military services’  accounts received a majority of DOD’s funding relative to other DOD  components, their accounts were reduced by the largest amount to  achieve DOD’s sequestration reductions.
subsections: section_title: Sequestration Resulted in Reductions to DOD’s Nonexempt Discretionary Resources, but Reductions Varied within Appropriation Accounts
paragraphs: DOD’s nonexempt discretionary resources experienced sequestration  reductions in fiscal year 2013, while the amount and percentage of  reductions within accounts varied, based on our analysis of data from a  June 2013 DOD report.annualized continuing resolution amounts upon which the initial  sequestration reductions were based, and the enacted full year  appropriations, the size of the percentage reductions for nonexempt  discretionary resources differed (see table 1). For example, among the  appropriation accounts that we reviewed, RDT&E had the largest  reduction as a percentage of its sequestrable base (8.1 percent), while  military construction had the smallest (4.4. percent).
section_title: DOD’s Use of Available Unobligated Balances to Meet Sequestration Reductions Varied by Appropriation
paragraphs: to achieve DOD’s  The use of prior year unobligated balancessequestration reductions varied by appropriation, ranging from  4.2 percent of the operation and maintenance reduction (about  $860 million) to 42 percent of the procurement reduction (about  $4.1 billion), based on our analysis of data from a June 2013 DOD report.  The distribution of fiscal year 2013 sequestration reductions to  nonexempt discretionary resources between prior year unobligated  balances and fiscal year 2013 funds for each appropriation is shown in  figure 4 below.
The amount and availability of prior year unobligated balances within  some appropriation accounts, such as RDT&E and procurement, is due to  the multiyear nature of projects and programs funded by these  appropriations. For example, as of March 2013, the total amount of  available prior year unobligated balances was about $5 billion for RDT&E  and about $36.7 billion for the procurement accounts. DOD’s use of prior  year unobligated balances to help meet sequestration reductions varied  by appropriation account type. For example, DOD used about 13 percent,  or about $633 million, of available prior year unobligated balances in the  RDT&E accounts and about 11 percent, or about $4.1 billion, of available  unobligated balances in the procurement accounts to achieve  sequestration reductions.
section_title: The Military Services’ Appropriation Accounts Absorbed the Majority of Sequestration Reductions
paragraphs: As a result of the fiscal year 2013 sequestration, the military services’  appropriation accounts were reduced by the largest share relative to other  defense accounts because the military services’ accounts received a  majority of DOD’s funding relative to other DOD components.  Specifically, according to our analysis of data from a June 2013 DOD  report and DOD’s operation and maintenance budget execution report for  the fourth quarter of fiscal year 2013, the military services’ accounts were  reduced by about $28.3 billion of the total DOD sequestration reduction of  $37.2 billion (or 76 percent of the reduction). Among the appropriations,  sequestration reductions within the military services’ accounts included  reductions of about $14 billion for operation and maintenance (or about  69 percent of the reduction within DOD’s operation and maintenance  accounts) and about $9.1 billion for procurement (or 93 percent of the  reductions within the procurement accounts). Figure 5 illustrates the  amount of the reduction that the military services’ and other defense  accounts absorbed within each appropriation type due to the fiscal year  2013 sequestration.
As discussed above, for the RDT&E, procurement, and military  construction accounts, the military services applied the same percentage  reduction within an account to each budget line item for their individual  weapon systems or other acquisition programs and military construction  projects. In contrast, within their operation and maintenance accounts, the  military services had the flexibility to allocate sequestration reductions to  specific functions and activities. As shown in figure 6, we found that the  military services applied varying sequestration reductions across  11 categories funded by their operation and maintenance accounts.
In particular, we found that four of these categories— operational tempo  and training; base operating support; maintenance and weapon systems  support; and operations support and transportation—were reduced by  approximately $12 billion. This amount accounted for about 85 percent of  the military services’ total operation and maintenance reduction.
section_title: DOD’s Actions Preserved Certain Programs and Functions, but Some Negative Effects Related to the Fiscal Year 2013 Sequestration Were Identified
paragraphs: To implement sequestration in fiscal year 2013, DOD and the military  services took steps to preserve certain key programs and functions, while  making spending reductions to other lower-priority programs, projects and  functions. In interviews and documents we reviewed, DOD and service  officials identified negative effects of sequestration across our case  studies. Many of the identified effects were interrelated and varied among  service components. DOD officials stated that some long-term effects of  sequestration were difficult to quantify and assess.
subsections: section_title: DOD Took Near-Term Actions While Implementing Sequestration Reductions to Preserve Key Programs and Functions
paragraphs: DOD and the military services provided guidance to their subordinate  commands and components identifying near-term actions to help plan for  and implement sequestration, and the components took a variety of  actions in response to this guidance. For example, a Deputy Secretary of  Defense January 2013 memorandum directed the components to  minimize harmful effects on people, operations, and unit readiness when  carrying out their spending reductions. To that end, the memorandum  directed DOD components to fully protect, among other things, funding for  wartime operations, and to protect, to the extent feasible, funding most  directly associated with readiness and family programs. The  memorandum also directed that the components take steps to minimize  disruption and additional costs to acquisition programs and military  construction projects.
In response to this memorandum, DOD components took steps to protect  funding for those higher priorities. For example, based on direction to  preserve military readiness and wartime operations, military service  officials told us that they protected funding for training for units that were  deploying or next to deploy in support of ongoing operations. To ensure  child development centers—a type of family program—had enough care  providers to maintain accreditation, DOD exempted personnel who  worked at these centers from the 6-day administrative civilian furlough. Further, service officials told us they did not cancel any weapon system or  other acquisition program, nor did they cancel, defer, or reduce the scope  of any major military construction projects, pursuant to verbal guidance  from Office of the Secretary of Defense officials.
section_title: Sequestration Resulted in Three Key Effects on DOD Programs and Functions, with Some Effects Interdependent and Some Varying by Component
paragraphs: Secretary of Defense Memorandum, Furloughs (May 14, 2013). documents we reviewed, DOD and service officials identified some  negative effects from these and other steps taken to implement fiscal year  2013 sequestration reductions. The effects identified within and across  our case studies were generally related to:
Costs and spending: future financial costs related to contracts or  activities and/or inefficient allocation of resources due to the timing or  availability of funding.
Delayed time frames and cancelled activities: schedule delays;  increases in the amount of time necessary to complete planned  activities or functions and/or cancelled activities.
Decreased availability of forces and equipment: reduced global  presence and/or limited capabilities and capacities of both military  personnel and equipment.
Within a given case study, some DOD components identified little to no  effect overall, while others components reported a combination of effects  related to costs and spending, time frames or cancellations, and the  availability of forces. Appendix I provides additional information about  effects from sequestration that were identified by each of the service  components across our five case studies.
subsections: section_title: Service Actions Resulted in Effects Related to Increased Costs and Deferred Spending
paragraphs: Some actions that DOD and the military services took to reduce expenses  in fiscal year 2013 increased costs and spending in other areas of the  budget during fiscal year 2013 or in a subsequent fiscal year. The  following are examples of sequestration-related effects that DOD and  service officials identified across our case studies:
The Navy identified an overall increase in operational costs totaling  about $7.6 million as a result of DOD’s decision to delay the  deployment of the USS Harry S Truman Carrier Strike Group by  4 months. Navy officials explained that the additional cost was  associated with maintaining readiness for the carrier strike group by  continuing ship and air operations during the deployment delay.
The Army reported deferring about $630 million of costs from fiscal  year 2013 to fiscal year 2015 to perform maintenance on equipment  returning from overseas contingency operations. This amount  included maintenance funding for about 13,000 pieces of equipment,  or about 9 percent of the approximately 142,000 equipment items the  Army planned to repair in fiscal year 2013, among other things.
Program officials with 4 of the 19 weapon systems we reviewed  indicated that increased costs to particular aspects of their activities  were due, at least in part, to the fiscal year 2013 sequestration. For  example, Navy P-8A Poseidon officials reported that sequestration, in  combination with congressional reductions, led to delays in  establishing depot maintenance repair capabilities that are anticipated  to result in cost savings. According to the officials, the delay in  establishing these depot capabilities will defer such cost savings,  resulting in a cumulative increase in overall life cycle costs of about  $191 million, of which about $56.7 million was directly attributed to  sequestration.
section_title: DOD and Service Actions Resulted in Effects Related to Cancelled Activities or Delayed Time Frames
paragraphs: Actions that DOD and the military services took to reduce spending in  fiscal year 2013 resulted in some cancelled activities, schedule delays in  beginning activities or projects, or increases in the amount of time  necessary to complete them. DOD officials reported the actions also had  longer-term effects on weapon systems and plans to restore military  readiness in some cases. The following are examples of sequestration- related effects identified by DOD officials across our case studies:
All four of the military services cancelled or reduced participation in  training exercises in fiscal year 2013. For example, the Army  ultimately cancelled a total of 7 of 14 planned Combat Training Center  exercises in fiscal year 2013, including training for 5 active duty and  2 Army National Guard brigade combat teams. Similarly, the Air Force  cancelled or reduced participation in 32 of 48 of its large-scale  planned exercises, including two of its key multinational training  events. According to service officials, these lost opportunities limited  the number of trained individuals and units and contributed to an  expected delay in achieving the goal of restoring readiness to forces  that have been heavily deployed supporting overseas contingency  operations.
Program officials from 15 of the 19 weapon systems we reviewed  reported experiencing delays, in part, due to the fiscal year 2013  sequestration. For example, according to officials from the Army’s AH- 64E Apache helicopter program office, the combined effects of the  fiscal year 2013 sequestration and the continuing resolution affected  the timeline for acquisition decisions for the AH-64E Apache in fiscal  years 2013 and 2014, which resulted in contract changes and delays  to time frames for evaluating and negotiating the system’s contract.
DOD and service officials stated that all five DOD military construction  accounts with sequestration reductions reported delays in awarding  contracts for construction projects appropriated in fiscal year 2013.
For example, the Navy did not award contracts for 33 out of  54 construction projects funded in fiscal year 2013. In contrast, the  Navy did not award contracts for 17 out of 57 projects funded during  fiscal year 2012. Project management officials from the service  components stated that fewer projects were awarded than planned in  fiscal year 2013—which could lead to corresponding delays in project  completion and increased costs—but were unable to quantify the  longer-term effects on time frames or costs.
section_title: Service Actions Resulted in Effects Related to Decreased Availability of Forces and Equipment
paragraphs: Some actions the services took to reduce spending in fiscal year 2013  decreased the availability of forces and equipment, reduced global U.S.  military presence, and increased risk by limiting some service capabilities  and capacity for responding to contingencies or other emergencies. The  following are examples of sequestration-related effects identified by DOD  officials across our case studies:
The Navy cancelled or delayed some planned ship deployments in  fiscal year 2013, which resulted in a 10 percent decrease in its  deployed forces worldwide. For example, due to spending reductions,  the Navy cancelled the deployments of the USNS Comfort and its  supporting medical units, the USS Kauffman, and a maritime civil  affairs team to the U.S. Southern Command area of responsibility.  The Navy also postponed other deployments, such as delaying by  4 months the deployment of the USS Harry S Truman Carrier Strike  Group to the U.S. Central Command area of responsibility. This delay  reduced the Navy’s presence in the region to one carrier strike group.
Naval Air Systems Command reduced funding to perform  maintenance on and recertify about 800 weapons and weapon  components—about 50 percent of those planned at the beginning of  fiscal year 2013. According to Navy officials, deferring maintenance  on these weapons and weapon components contributed to shortfalls  in the availability of some weapons and necessitated the transfer of  weapons across ships to conduct planned training and operations.
Five of the eight active component Air Force commands we  interviewed told us that some of their installations experienced  reduced levels of fire and emergency response personnel or related  equipment, fewer security force personnel and vehicles than needed,  or both. Air Force officials said the shortfalls decreased their response  capability for attending to critical incidents like aircraft fires or fuel  spills, and to the air base defense program. However, officials were  unable to quantify the specific number of personnel shortfalls or risk  based on decisions to reduce funding for these base services.
Program officials for 9 of 19 weapon systems we reviewed reported  reduced or deferred system development or procurement efforts as a  result of fiscal year 2013 sequestration reductions, which in turn  delayed the release of these enhanced systems to the warfighter. For  example, Army MQ-1C Gray Eagle unmanned aircraft system  program officials told us that a reduction in procurement funds due to  sequestration resulted in deferrals and delays for procuring a number  of upgrades to the system, including radio upgrades, new shipping  containers, and an engine lifetime extension. These deferrals could, in  turn, delay the eventual fielding of the upgraded aircraft to the  warfighter, since they increase the risk that the system may not  receive necessary certifications that it is safe and suitable for use.
section_title: Many Sequestration Effects Were Interdependent, and Some Effects Varied among Service Components
paragraphs: Our analysis of DOD- and service-identified actions found that many of  the reported sequestration-related effects were interdependent and  overlapped. For example, delays in scheduled time frames often led to an  additional cost or a spending increase in future fiscal years. Similarly,  both increased costs and delayed time frames were also related to the  reduced availability of forces and equipment in some cases. Based on  interviews with service officials and our analysis of related documentation,  we found some instances of interrelated effects across our case studies.  For example:
Due to spending reductions on some base operating support  activities, the Navy limited its port operations to normal business  hours. As a result, one Navy command estimated that it cost an  additional $135,000 over its budgeted operating expenses for three  ships to delay their arrival to port and auxiliary steam because they  could not connect to shore power outside of the restricted port hours.
Officials from the Navy’s CH-53K King Stallion helicopter program  office told us that sequestration reductions contributed to a 2-month  delay to the program’s schedule, including the start of low-rate initial  production, where small quantities of the system are produced for  testing and evaluation before producing greater quantities for fielding.  These officials told us the delays affected acquisition milestones and  the fielding of a more capable helicopter, and estimated that  sustaining the program for an additional 2 months would increase  estimated program costs by about $20 million to $30 million.
Within our case studies, we also found that sequestration effects varied in  type among different services and their components. For a given case  study area, some components identified little to no effect overall, while  other components reported a combination of effects related to costs and  spending, time frames or cancelled activities, and to the availability of  forces. For example, some service command officials we interviewed told  us that they were not aware of any significant negative effects on base  operating support within their command or component with regard to the  availability of personnel or equipment. While some Air Force commands  did report negative effects due to sequestration, as noted earlier, four  other Air Force commands reported to us that they were able to  accomplish their missions in fiscal year 2013 without any critical  disruptions to the delivery of base support services. Also, officials from  the Marine Corps and Marine Corps Reserve told us that there were no  significant effects to base operating support due to sequestration.
section_title: Other Effects of Sequestration Are Difficult to Quantify and Assess and May Not Be Fully Realized for Years
paragraphs: Based on our review of service documentation and interviews with service  officials, sequestration reductions resulted in some effects that are difficult  to quantify and assess and are therefore undetermined at this time.  These types of effects include, among others, a decline in morale, the  ability to hire and recruit a high-caliber civilian workforce, and the ability to  build and maintain partner nation trust. In addition, our prior work found  that, according to service officials, the 6-day civilian furlough during fiscal  year 2013 negatively affected morale among civilian employees as well  as service members.
Officials from three of the military services also told us they believe the  fiscal year 2013 sequestration has continued to affect their ability to  recruit civilian and military personnel, but the effects on recruitment were  undetermined at the time of our review and may not be quantifiable. For  example, Navy officials told us they believe that the cancellation of fleet  weeks and 27 of 30 Blue Angel squadron flight demonstrations in fiscal  year 2013 could affect their future recruitment rates because those events  are critical to their recruitment strategy.
Further, officials from the Air Force and Navy said that reducing and  cancelling exercises and deployments can negatively affect their ability to  build and maintain partner nation trust, which is difficult to quantify. For  example, Pacific Air Force documentation shows that the command  reduced or cancelled their participation across several bilateral and  multilateral training exercises. Officials said this likely affected their ability  to build trust and partner capacity in the region and moreover, could give  the appearance to other partner nations that the United States is an  unreliable or uncommitted partner. Pacific Air Forces officials said that  they would consider making different choices should sequestration occur  again, because of concerns about the United States appearing unreliable  or uncommitted to its partners, and the effect that lost trust could have on  future U.S. participation in the region. Similarly, Pacific Fleet officials said  that reductions to fuel as a result of sequestration limited participation in  exercises and foreign country port visits in Seventh Fleet, which is  assigned to support U.S. Pacific Command, and that cancelled  deployments limited participation in support of partnership events in  Fourth Fleet, which is assigned to U.S. Southern Command. Pacific Fleet  officials said that these cancelled or reduced commitments would affect  the Navy’s ability to engage and build relationships with partner nations.
The fiscal year 2013 sequestration resulted in other effects that may not  be known for years, such as the future costs associated with facilities  repair and equipment maintenance projects that were deferred during  fiscal year 2013. For example, in fiscal year 2013 the Army reduced  funding for facilities sustainment projects, including preventative  maintenance and repairs, by nearly $1 billion dollars, which represented  about 40 percent of its fiscal year 2013 base budget request. Officials told  us there may be an increased future cost to restore facilities to standards,  but were unable to determine the additional cost. Likewise, Navy  officials stated that the deferral of many non-emergency maintenance and  sustainment activities may eventually diminish facility life cycles and lead  to higher future costs for restoration or demolition, but these officials were  unable to determine the increased costs.
section_title: DOD Used Available Means to Mitigate the Effects of Sequestration, but Has Not Consistently Documented and Shared Best Practices or Lessons Learned
paragraphs: DOD and the military services generally relied on previously existing  processes and funding flexibilities, such as the ability to reprogram and  transfer funds, to mitigate the effects of the fiscal year 2013  sequestration. Our review identified some limited efforts to document  decisions or lessons learned from implementing the fiscal year 2013  sequestration, but DOD and the military services did not comprehensively  document, assess, or share best practices or lessons learned from their  experiences.
subsections: section_title: DOD Relied on Existing Processes and Funding Flexibilities to Manage Sequestration
paragraphs: DOD did not receive specific additional authorities to help manage fiscal  year 2013 sequestration reductions, but according to DOD and military  service officials, they relied on guidance and previously existing  processes and flexibilities for managing reduced resources to help  mitigate the effects of sequestration. Guidance provided before and after  the President’s sequestration order emphasized that federal agencies  should identify appropriate steps to manage budgetary uncertainty while  minimizing any adverse effects to agency missions. For example, an  Office of Management and Budget memorandum on planning for  budgetary uncertainty in fiscal year 2013 directed federal agencies to use  any available flexibility to reduce operational risks and minimize effects on  the agency’s core mission. Similarly, a DOD memorandum on handling  budgetary uncertainty authorized its components to begin implementing  near-term actions, reversible if possible, to mitigate the risks caused by  the continuing resolution in place at the time, and potential  sequestration.
In response to this guidance, DOD and the military services took various  actions to mitigate the effect of sequestration, such as establishing  processes to identify priorities and evaluate alternatives for spending  reductions. In some cases, the military services leveraged existing  approaches, such as ranking programs and functions, to manage  sequestration reductions within their commands and program offices. For  example, according to Army budget officials, the Army utilized a process  referred to as a sequestration “Rehearsal of Concept” drill to identify  priorities Army-wide and implement reductions. According to Army  officials, a Rehearsal of Concept drill is generally used to inform  operational decisions, but this drill was used for the fiscal year 2013  sequestration to involve relevant stakeholders and establish priorities  across the range of programs and activities that would be affected by  sequestration reductions. Army Forces Command officials informed us  that in addition to the Rehearsal of Concept drill, the Army also relied on a  process referred to as a “Focus Area Review Group” to manage  sequestration reductions in an effort to maintain readiness and minimize  risks to the Army’s forces and missions.
Service officials also noted that broadening some of their existing  processes removed stove-pipes to planning and allowed them to integrate  requirements and plan command- or service-wide rather than by  individual functional area. For example, to implement the fiscal year 2013  sequestration reductions at the major command level, Air Combat  Command officials adapted their existing planning process by grouping all  of the command’s functions and activities into three categories based on  their relative funding priority. Officials told us that considering  requirements command-wide rather than by directorate or functional area,  as they had done prior to fiscal year 2013, gave them better visibility over  the interrelationship of funding and allowed them to make more informed  decisions about what functions and services were needed to maintain  their commitment to readiness. For example, command officials said this  allowed them to consider and balance the need for base operating  support funding for utilities and building leases against other priorities  such as their flying hour program.
Using these processes to prioritize funding, the services were able to  mitigate some effects to those activities deemed the most critical based  on DOD and service guidance, while reducing funding to lower priority  activities. Within the areas we selected for more in-depth review, we  found that the services prioritized areas, such as training and equipment  maintenance in support of deployed and next-to-deploy forces and base  services like family and warfighter support programs. For example, we  found the military services prioritized funding for base support services  over funding for facilities, sustainment, restoration, and modernization  projects because base support services fund essential functions like  family programs, civilian salaries, and utilities. According to our analysis  of DOD’s fiscal year 2013 budget data, the services reduced facilities,  sustainment, restoration, and modernization funds by about $2.8 billion or  almost 27 percent of the enacted funding amount, which was almost three  times as much as the approximately $1 billion, or 4 percent reduction to  base operating support services. Furthermore, the military services  prioritized funding to support training and equipment maintenance for  currently deployed and next-to-deploy forces, while cancelling or  curtailing training and maintenance for non-deploying units. For example,  all four of the military services reported being able to fulfill combatant  commanders’ requests for forces in fiscal year 2013, but said that  reductions in training for non-deploying units affected the readiness of  these forces.
DOD also used existing funding flexibilities to manage sequestration  reductions and other budgetary constraints in fiscal year 2013, such as  the ability to establish funding priorities for certain accounts, use prior  year unobligated balances to achieve some portion of the sequestration  reductions, and use reprogramming and transfer authorities to realign  funds between and within accounts. For example, with regard to the  operation and maintenance accounts, DOD officials said they had more  flexibility in allocating sequestration spending reductions than they did for  other accounts. Specifically, the program, project, and activity for  operation and maintenance was defined at the overall account level.  According to officials from DOD and some military services, this provided  the flexibility to establish funding priorities for specific activities within  accounts and reduce funding for lower priority activities. This is in contrast  to the program, project, and activity definitions for the RDT&E,  procurement, and military construction appropriation accounts. For these  accounts, DOD and the services had to apply reductions evenly across  each budget line item for their individual weapon systems or other  acquisition programs and military construction projects.
As discussed earlier, DOD and the military services also reported using  prior year unobligated balances to help meet fiscal year 2013  sequestration reductions within their RDT&E, procurement, and military  construction accounts. According to some DOD and service officials, the  use of unobligated balances within the RDT&E and procurement  accounts helped them offset some sequestration reductions and minimize  the effect those reductions may have otherwise had. For example,  according to Air Force officials the use of prior year unobligated balances,  among other factors, allowed them to protect their top weapon systems  and other acquisition programs and avoid some schedule delays.
DOD also used its transfer and reprogramming authorities to help mitigate  the effects of sequestration and other budgetary constraints in fiscal year  2013. DOD officials said that transfer and reprogramming flexibilities are  used annually to address funding priorities. However, the use of transfers  and reprogrammings helped them mitigate reduced resources as a result  of sequestration as well as to cover expenses related to overseas  contingency operations shortfalls and emergent operational requirements,  among other factors. Our review of DOD data found that the department  used most of its available transfer authority and realigned most of these  funds into the operation and maintenance accounts from other types of  accounts. Specifically, according to data from Office of the Under  Secretary of Defense (Comptroller) officials, of the $7.5 billion in transfer  authority available to DOD for fiscal year 2013, DOD utilized $6.8 billion,  or about 91 percent of the authority in total. Using these authorities, DOD  had the flexibility to move funds between appropriations and in doing so  provided additional resources to the operation and maintenance  accounts. Our analysis also found that DOD transferred about $5.7 billion  into the operation and maintenance accounts from other appropriations,  primarily from the military personnel and procurement accounts.
The use of transfers and reprogrammings allowed the services to mitigate  or reverse some actions that were taken initially after the March 1, 2013  sequestration order. For example, in July 2013, the Air Force resumed  flight operations for 17 active duty combat units that had initially ceased  flying in April 2013. The Navy also restored planned maintenance for  eight surface ships that had been initially deferred. Similarly, DOD used  transfer or reprogramming authorities to move funds from prior years and  cancelled projects unrelated to sequestration, to offset the $821 million  sequestration reduction within the military construction accounts. DOD  and service officials stated that as a result of this flexibility, no  construction projects were delayed, reduced in scope, or cancelled as a  result of sequestration.
Notwithstanding the flexibility to transfer and reprogram funds, some  actions taken in response to sequestration could not be reversed, and  some of the programs we reviewed within the RDT&E and procurement  accounts also had their funding further reduced by transfer and  reprogramming actions. For example, Army training officials stated  capacity constraints at their Combat Training Centers and the timing of  funds reprogrammed later in the fiscal year affected the Army’s ability to  reschedule cancelled Combat Training Center rotations. In addition, we  found that several acquisition programs for weapon systems included  within our RDT&E and procurement case study had their funding reduced  as a result of transfers or reprogrammings beyond the sequestration  reductions, including the AH-64E Apache helicopter and F-15 and F-22  aircrafts. According to Air Force F-15 officials, about $24 million in  RDT&E and procurement funding was transferred to support critical  readiness shortfalls within the Air Force’s operation and maintenance  account.
section_title: DOD and the Services Have Not Consistently Documented, Assessed, and Shared Best Practices or Lessons Learned from Implementing and Managing Sequestration
paragraphs: Consistent with GAO’s March 2014 recommendation, the Office of  Management and Budget updated its guidance to federal agencies in  November 2014 to include a section specific to sequestration. This  guidance instructs federal agencies to record decisions about how  sequestration is implemented to maintain consistency from year to year,  inform efforts to plan for sequestration in future years, and build  institutional knowledge. Although the Office of Management and  Budget’s guidance was revised after the end of fiscal year 2013 and does  not explicitly require agencies to record decisions regarding the fiscal  year 2013 sequestration, federal internal control standards also highlight  the importance of documenting significant events in a timely manner.  Specifically, these standards state that agencies should identify, record,  and distribute pertinent information to the right people in sufficient detail,  in the right form, and at the appropriate time to enable them to carry out  their duties and responsibilities and ensure that communications are  relevant, reliable, and timely.
During our review, we found that DOD and the services had taken some  steps to document decisions and actions taken in response to reduced  resources in fiscal year 2013. For example, according to officials from the  Office of the Under Secretary of Defense (Comptroller), their office had  documented decisions on sequestration reductions at the program,  project, and activity level with the release of their June 2013 report, DOD  Report on the Joint Committee Sequestration for Fiscal Year 2013. These  officials also told us that throughout the implementation of sequestration  in fiscal year 2013, their office collected information from the military  services on programs, projects, and activities that were cancelled due to  sequestration and reported this information to the Office of Management  and Budget. In addition, some officials within the services’ budget offices  confirmed that sequestration reductions at the program, project, and  activity level had been documented in their financial management  systems.
Officials from all of the services also informally identified some lessons  learned from their experiences implementing sequestration. Officials told  us that prior to sequestration, they had not considered or were not fully  aware of the interdependency of certain programs and activities, the order  in which certain functions would need to have funding restored to  accomplish intended results, or the potential for unintended  consequences as a result of some funding decisions. For example, Army  officials told us that shortfalls in funding for training ranges and facilities  affected the Army’s ability to conduct training for some units whose  resources had been reduced due to sequestration. Army Forces  Command officials explained that unit readiness continued to decline  through fiscal year 2014 even though funding had been restored for its  units until ammunition distribution, maintenance, transportation, and  training range services were also restored.
Further, Air Force officials identified the need to balance reductions  between operational and individual training requirements, and noted that  both preserving funding for individual training and education requirements  and maintaining a commitment to provide ready forces for operations are  important to the long-term health of the force. Similarly, officials from the  Navy said that some actions taken, such as not exempting all shipyard  civilians from furloughs or not performing preventative maintenance, had  unintended consequences for maintenance schedules or resulted in  increased costs overall. Specifically, Navy officials told us a decision to  defer preventative maintenance repairs to a damaged landing ramp later  resulted in an approximately $600,000 cost to repair a landing craft when  loose concrete damaged its engine. While officials said it is difficult to  know which decisions may lead to higher costs, they noted the  importance of understanding the interrelationship between funding and  potential consequences from funding decisions. Further, according to a  Marine Corps budget official, planning for sequestration in fiscal year  2013 allowed the Marine Corps to better understand the potential effects  that reductions would have across their commands and within functional  areas, which informed their budgetary planning in fiscal years 2014 and  2015.
Our review found that the Joint Staff and two of the services had  undertaken initiatives to document lessons learned or best practices from  implementing sequestration. Specifically:
Officials from the Joint Staff Manpower and Personnel directorate said  that in June 2013 they gathered effects and lessons learned specific  to DOD’s civilian furlough in fiscal year 2013. Officials told us that  these efforts were not formally documented in a report or the Joint  Staff’s Lessons Learned Information System, but the lessons and  effects identified would help to inform decision-making should another  civilian furlough occur.
Similarly, in November 2013, the Navy Warfare Development  Command completed a review of the effects and lessons learned  stemming from the civilian furlough. This review identified costs,  savings, and effects associated with furloughing civilians in fiscal year  2013, as well as lessons learned and recommendations should  civilian furloughs occur again. For example, the review found that  almost half of the savings from furloughing Fleet Forces Command  and Pacific Fleet civilians was lost due to costs from schedule delays  or lost productivity, and recommended that the Navy fully consider the  interdependencies between the reductions in civilian workforce and  the Navy’s capacity to meet fleet requirements should a furlough  occur again.
At the time of our review, the Air Staff Lessons Learned directorate  was finalizing its review of information gathered from its active and  reserve components on the Air Force’s implementation of  sequestration, its effect on readiness and infrastructure, and any  lessons learned that could inform future decision-making should  sequestration occur again. Air Force officials told us that they plan to  release a final report identifying their observations and lessons  learned at the end of May 2015, which they expect to share across  the Air Force and on the Joint Staff’s Lessons Learned Information  System.
The Joint Staff, Navy, and Air Force’s initiatives represent positive steps  towards documenting lessons learned and best practices from  implementing sequestration. However, the information produced through  these and other DOD efforts is limited in scope and purpose, are still  ongoing, and have not been widely shared across the services. For  example, the scope of the Joint Staff’s and Navy’s reviews was limited to  lessons learned from the civilian furlough and the Air Force’s initiative is  still ongoing. As a result, it remains unclear whether or how applicable  either of the services’ lessons learned will be in informing their future  budgetary planning and decision making. Moreover, officials from the  Army, Marine Corps, and Office of the Under Secretary of Defense  (Comptroller) told us they were unaware of the Joint Staff, Navy, and Air  Force’s initiatives, suggesting that some information on lesson learned  efforts is not being disseminated across DOD and the services.
There are existing processes in place to share information on lessons  learned across DOD and the services. For example, three of the services’  lessons learned offices told us that in addition to maintaining their own  lessons learned databases, the Joint Staff’s Joint Lessons Learned  Information System can be used to document and share lessons learned  identified across the services. Further, officials from Navy Warfare  Development Command told us that they learned about the Air Force’s  efforts to document sequestration-related lessons learned through a  quarterly Joint Lessons Learned Program review. According to officials  from the Navy Warfare Development Command, the services’ lessons  learned offices participate in these quarterly reviews, which are led by the  Joint Staff’s Lessons Learned directorate and can be used to share  lessons learned and best practices across the services.
Although DOD and some services have independently taken some steps  to document decisions and lessons learned from sequestration, they did  not establish requirements for their commands and components to  document or assess information on best practices or lessons learned, as  identified by the Office of Management and Budget’s guidance and  federal internal control standards. According to DOD and some service  officials, as of February 2015, they were unaware of or had not taken  steps to comply with the Office of Management and Budget’s guidance to  document the decisions concerning implementation of sequestration. In  February 2015, officials from the Office of the Under Secretary of Defense  (Comptroller) told us that, in their opinion, documenting decisions on  sequestration reductions at the program, project, and activity level within  their financial management systems effectively complied with the Office of  Management and Budget’s guidance and that they did not plan to take  any additional steps to document lessons learned in response to the  guidance.
Officials with the Office of the Under Secretary of Defense (Comptroller)  and some of the military services also told us they did not see the value in  documenting or assessing past decisions or gathering such information  beyond the efforts they have already made. For example, officials with the  Office of the Under Secretary of Defense (Comptroller) explained that the  weekly reports provided to the Office of Management and Budget on  actions taken in response to sequestration in fiscal year 2013 have not  been used to provide a comprehensive assessment of sequestration’s  effects. According to these officials, they consider each sequestration  event to be unique and said that that they would issue subsequent  guidance to the components on how to implement any future instances of  sequestration at that time, should it occur. However, these officials did  acknowledge that consolidating policy memorandums and documentation  regarding management actions taken during the fiscal year 2013  sequestration so that these decisions are easily accessible across the  department might be beneficial to planning for a possible future  sequestration.
DOD’s efforts to document sequestration decisions within their financial  accounting systems could provide some visibility over how the  department allocated sequestration reductions to inform future planning  efforts. Yet these decisions are not inclusive of the broader principles and  practices used by the department to manage sequestration reductions in  fiscal year 2013 and do not account for any lessons learned during the  implementation of sequestration. Without documenting, assessing, and  sharing DOD’s and the services’ best practices and lessons learned from  implementing sequestration, including, for example, strategies for  evaluating the interdependence of various funding sources subject to  budgetary reductions, DOD is missing an opportunity to gain valuable  institutional knowledge that would help facilitate future decision making  about budgetary reductions should sequestration occur again.
section_title: Conclusions
paragraphs: DOD received relief in fiscal years 2014 and 2015 from the spending caps  established by the Budget Control Act of 2011, but under current law,  DOD could experience sequestration again in future fiscal years,  depending on the appropriations enacted for fiscal year 2016 and beyond.  In fiscal year 2013, DOD was able to reduce the effects of sequestration  on programs that the department and the military services determined to  be high priorities. However, the reductions that did occur had a variety of  effects, including cancelled training exercises and delays in performing  equipment maintenance, contracting for military construction projects, and  developing and procuring weapon systems, among others, as well as  longer-term effects that may be hard to determine. Given that some  budget flexibilities the department used in 2013 to mitigate the size of  reductions may be unavailable in future years—for example because of a  decrease in available prior year funds for transfer or reprogramming—it is  all the more important that DOD be able to use the institutional knowledge  it gained when implementing sequestration in fiscal year 2013. In light of  this possibility and other ongoing budget uncertainties, the department  could benefit from a close examination of its experience with  sequestration in fiscal year 2013. Some decision makers tasked with  implementing the 2013 sequestration gained valuable insights into how to  manage budget reductions, for example by gaining visibility over the  interrelations between various budget accounts and the effect of the  reductions to some accounts on carrying out activities funded by other  accounts. However, without documenting, assessing, and sharing  information on lessons learned and best practices in implementing the  2013 sequestration reductions across the department and leveraging  existing mechanisms to share this information, decision makers at the  program, DOD component, and department-wide levels may not benefit  from such insights.
section_title: Recommendations for Executive Action
paragraphs: To better enable DOD and the services to achieve informed decision  making in future times of budgetary uncertainty, the Secretary of Defense  should direct the Under Secretary of Defense (Comptroller) and the  secretaries of the military departments to take the following two actions:
Document and assess lessons learned and best practices from  implementing sequestration in fiscal year 2013. These lessons could  include such practices as evaluating the interdependence of different  types of funding sources to better understand how those can be  synchronized to optimize capacity and minimize disruptions to training  and readiness in the event of future budgetary constraints; and
Leverage existing information-sharing mechanisms to make these  lessons learned and best practices available to decision makers within  the services and across the department.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOD for review and comment. In its  written comments, DOD concurred with our two recommendations.  Specifically, DOD stated that the Office of the Under Secretary of  Defense (Comptroller) will work with the military services to develop a  repository of lessons learned and best practices gathered from  implementing the fiscal year 2013 sequestration. DOD also stated this  office will develop a Web portal accessible from across the department to  house the lessons learned and best practices. DOD stated the target date  for completion of both efforts is December 2015.
DOD’s comments are reprinted in their entirety in appendix IV. DOD also  provided technical comments, which we incorporated into this report,  where appropriate.
We are sending copies of this report to appropriate congressional  committees; the Secretary of Defense; the Under Secretary of Defense  (Comptroller); the Secretaries of the Army, Navy, and Air Force; and the  Commandant of the Marine Corps. In addition, the report will be available  at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  Johana R. Ayers at (202) 512-5741 or ayersj@gao.gov, or Michael J.  Sullivan at (202) 512-4841 or sullivanm@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V.
section_title: Appendix I: Case Study Observations
paragraphs: Our review included the sequestration reductions applied by the  Department of Defense (DOD) in fiscal year 2013 to its base and  overseas contingency operation funding within the following nonexempt  appropriation accounts: operation and maintenance; research,  development, test and evaluation (RDT&E); procurement; and military  construction.of the five nongeneralizeable case studies included in our review. We  selected these case studies by identifying five types of expenses or  investments to represent each type of nonexempt appropriation, to  include:   This appendix contains more detailed information for each  1.  operation and maintenance accounts: military service components’  operational tempo and training;  2.  operation and maintenance accounts: military service components’  maintenance and weapon systems support;  3.  operation and maintenance accounts: military service components’  4.  RDT&E and procurement accounts: a selection of defense-wide and  military services’ acquisition programs for weapon systems; and  5.  military construction accounts: defense-wide and military services’  major military construction projects.
More detailed information on our approach to selecting the case studies  can be found in appendix II.
In this appendix, for each case study, we provide a summary that  includes information on the following elements:
Overview: A description of the types of programs, projects, and/or  activities funded within the case study and the corresponding  budgetary resources for fiscal year 2013.
Allocation of sequestration reductions: A summary of how  sequestration reductions were allocated within the case study area,  including differences in how reductions were applied within DOD  components.
Sequestration effects: A description of sequestration-related effects  within each case study area are generally grouped by categories of  costs and spending; delayed time frames or cancelled activities;  availability of forces and equipment; and, where appropriate, effects  that are undetermined or difficult to quantify.
Mitigation efforts: A summary of the flexibilities applied and actions  taken by DOD components to mitigate the effects of sequestration  reductions within the various case studies, including such things as  the use of prior year unobligated balances, transfer and  reprogramming authorities, and other case-study- or component- specific initiatives.
The case study findings presented in this appendix provide illustrative  examples of fiscal year 2013 sequestration effects and mitigation  strategies across the department. Whenever possible, we corroborated  testimonial evidence from interviews with DOD officials with data or other  documentary evidence regarding the effects (including expected future  effects) of sequestration on programs, projects, and activities within the  case study areas. However, data were unavailable to support some of the  anticipated future effects that officials described to us, such as the degree  of deterioration of infrastructure from reduced sustainment funding. While  the findings of the five case studies cannot be generalized to all DOD  programs, projects, and activities, they reflect a wide range of  perspectives across the department.
subsections: section_title: Case Study 1 - Operation and Maintenance Accounts: Service Components’ Operational Tempo and Training
subsections: section_title: Service Components Reduced the Total Enacted Amount of Funding for the Operational Tempo and Training Category by Almost Five Percent, but the Amount and Percentage Varied by Service Component
paragraphs: In implementing sequestration, the service components reduced fiscal  year 2013 funding for the operational tempo and training category by  about $2.7 billion, representing about 5 percent of the service  components’ enacted amount for the category according to our analysis  of DOD’s budget execution data (see fig. 8).
The active and reserve components allocated varying amounts and  percentages of sequestration reductions within the operational tempo and  training category, as shown in figure 9.
The active components of the Army, Navy, and Air Force applied larger  fiscal year 2013 sequestration reduction amounts—in dollar terms—to the  operational tempo and training category than did these services’ reserve  components, which reflects the larger size of the active components’  enacted amounts relative to those of the reserve components. The active  components’ reduction amounts ranged from $73 million for the Marine  Corps to $783 million for the Army. By comparison, reserve components’  reductions in the operational tempo and training category ranged from  $8 million for the Marine Corps Reserve to $414 million for the Air  National Guard. However, on average, the active components’ reduction  to the category as a percentage of the enacted amount (about 3 percent)  was smaller than that of the reserve components’ reduction (about  9 percent).
section_title: Reduced Spending Resulted in Effects Related to Increased Costs and Spending, Delayed Time Frames and Cancelled Training, and the Decreased Availability of Forces and Equipment
paragraphs: Based on our review of DOD’s budget execution data, service training  documents and data, and interviews with training officials, we found that  the service components took steps during the fiscal year 2013  sequestration to protect resources for certain priorities, such as deployed  units or those preparing to deploy for ongoing operations, in response to  DOD’s memorandum. As a result, officials from all four military services  reported being able to fulfill combatant commanders’ requests for forces  in fiscal year 2013. To preserve funding for these priorities, officials from  service component headquarters and commands reported making  reductions to spending in lower priority areas, such as training and  exercises for units not scheduled to deploy. Officials from some of the  service components identified some effects resulting from sequestration  reductions. However, the type of effects identified varied by component,  with some components indicating that they did not experience significant  negative effects. For example, Marine Corps Forces Command officials  told us the command avoided cancelling deployments or major exercises  and reported no readiness effects as a result of sequestration. As a result  of actions taken to reduce spending for lower priority areas in fiscal year  2013, service component officials identified negative effects, which based  on our analysis are related to increased costs in fiscal year 2013 or a  subsequent fiscal year; cancelled or reduced training activities and  delayed time frames to restore readiness; and a decreased availability of  forces or equipment to support operations and training. Some of the  effects identified were interrelated, while others were difficult to quantify.
subsections: section_title: Deployment Delays and Training Reductions Led to Increased Costs and Changes to Planned Spending
paragraphs: In some cases, reduced spending for certain activities in fiscal year 2013  led to increased costs for planned activities. For example, according to  officials from the Navy’s Fleet Forces Command, sequestration  reductions contributed to their decision to delay the deployment of the  USS Harry S Truman Carrier Strike Group by four months, which resulted  in an approximately $7.6 million increase in the carrier strike group’s  overall operational cost. These officials told us that the additional cost  was the result of maintaining the carrier strike group at a deployable  readiness level during the four-month delay, which required additional  spending on ship and air operations.
Reduced spending for training in fiscal year 2013 also led to increases in  planned spending in a subsequent fiscal year. For example, documents  from the Air Force’s Air Combat Command show that the command  ultimately reduced spending on its flying hour program by about  $315 million in fiscal year 2013, which led to a decrease in the combat  readiness of some units. readiness for units affected by sequestration, among other factors, Air  Combat Command officials stated the Air Force has increased spending  for the flying hour program more than previously planned for fiscal years  2014 through 2018.
section_title: Sequestration Reductions Led to Cancelled and Reduced Training and Some Delayed Time Frames to Restore Readiness
paragraphs: According to Air Combat Command documents, the command initially reduced its flying  hour program by about $592 million, or 18 percent, following the March 1, 2013  sequestration order. In May 2013 Headquarters Air Force resumed flying operations for  some units at an estimated cost of $69 million by reducing funding and increasing risk in  other areas of the budget. In addition, in July 2013 Headquarters Air Force reprogrammed  about $200 million, which allowed Air Combat Command to resume flying operations for  all units that had ceased flying earlier in the fiscal year. example, Army headquarters officials said that cancelling combat training  center rotations in fiscal year 2013 further limited professional  development opportunities for commanders that have had their combat  training center rotations focused on mission-specific training since 2001,  such as counter-insurgency skills. Further, Army headquarters officials  explained that cancelled combat training center rotations may also have  long-term consequences to units’ training and leadership expertise for  certain skills. For example, officials noted that officers and  noncommissioned officers in senior command positions who have  received limited training across the full range of operations may not have  sufficient expertise and experience to teach these skills to the junior  officers and noncommissioned officers they are expected to lead, adding  to a gap in expertise for some service personnel.
In addition, according to Air Combat Command documents and officials,  the Air Force stood down 17 of their 62 operational squadrons for  3 months in fiscal year 2013, and reduced flying hours for 10 other  squadrons for a period of 1 to 3 months each. Air Force officials told us  that the stand-down of the squadrons and reduced flying hours created  several effects. For example, Air Combat Command officials said that  pilots experienced deterioration in the proficiency of critical skills and  combat readiness that needed to be restored once the squadrons  resumed flying operations. Specifically, as of July 2013, an Air Combat  Command document reported a 13 percent decrease in reported combat  readiness due to reduced flying hours. In addition, pilots were unable to  execute more advanced training because they had to redo previously  completed training to regain lost proficiency. Air Combat Command  officials also told us that sequestration reductions resulted in the  cancellation of some training courses that may affect officer career  progression and the availability of these skill sets. For example, Air Force  documents show that a cancelled course for weapons instructors  prevented more than 100 weapons officers from being available for  assignment and will decrease the Air Force’s ability to fill weapons  instructor positions through at least fiscal year 2016.
Due to fiscal year 2013 sequestration reductions, the services also  cancelled some joint exercises, which led to lost opportunities to perform  training across services or combined training with other nations. For  example, officials from the Navy’s Pacific Fleet told us they cancelled  their biennial Northern Edge 13 joint training exercise. According to  Pacific Fleet officials, this joint exercise is designed to include Navy,  Marine Corps, and Air Force service participation and is one of two  regularly scheduled joint exercises in the U.S. Pacific Command’s area of  responsibility. These officials noted that its cancellation resulted in a  four-year gap in holding the event, limiting opportunities to conduct joint  training within the command. Further, Air Combat Command officials told  us that the Air Force cancelled or reduced participation in 32 of 48 large- scale planned exercises, ultimately effecting training for 283 units and  13 partner nations. Of those exercises cancelled, two were the Air Force’s  joint and multinational “Red Flag” exercises designed to emulate the full  spectrum of operations. Air Combat Command and Air National Guard  officials told us these lost training opportunities affected both active and  reserve units’ ability to conduct combined training and build relationships  with partner nations.
The cancellation of exercises and reduced training opportunities also  resulted in reported delays for meeting some of the services’ goals to  restore readiness for units affected by a high pace of combat operations.  For example, according to DOD budget documents, the Army planned to  begin refocusing the training for brigade combat teams undergoing  combat training center rotations in fiscal year 2013 on skills necessary to  perform full spectrum operations. However, Army headquarters officials  stated that the cancellation of six training exercises, along with other  reductions to training, delayed their goal of achieving readiness for full  spectrum operations for brigade combat teams from fiscal year 2019 until  at least 2020. Similarly, an Air Force headquarters official told us that it  took squadrons that were stood down an average of 9 months to regain  pilot proficiency and recover lost readiness. As a result of being stood  down and the amount of time spent regaining proficiency, Air Combat  Command officials reported that some pilots were only able to complete  mission-specific training prior to deploying and were unable to train for  other missions across the full spectrum of operations.
section_title: Reduced Training and Resources Limited the Availability of Forces and Equipment
paragraphs: Some actions the service components took to reduce spending in fiscal  year 2013 reportedly decreased the availability of forces and equipment  to support emergent needs or for other purposes. For example, Army  headquarters and Forces Command officials told us they reduced training  funds for their non-deploying units, which required these units to focus  resources on individual- and squad-level training and resulted in fewer  units trained and available for deployment than planned. According to  testimony by the Chief of Staff of the Army, 85 percent of brigade combat  teams were not ready for combat in fiscal year 2013, if required. Army  Forces Command officials told us that their training plans are designed so  that half of active component brigade combat teams are ready to deploy if  required. However, these officials told us that three brigade combat teams  with the required training were available to meet surge requirements at  the end of fiscal year 2013.
Air Force officials also reported effects on the number of units available to  respond to emergent requirements and the availability of equipment for  training. For example, Air Combat Command officials told us that from  April to July 2013 when the Air Force stood down 17 operational  squadrons and reduced flying hours for 10 more squadrons, it had  1 squadron with the required combat training available to deploy for  emergent requirements. Furthermore, according to internal summary  reports by two Air Force commands, these commands chose to limit their  supply purchases for squadrons to reduce spending, including purchases  of spare parts for equipment and weapon system repairs, to those  considered essential for fiscal 2013, and to defer any other purchases to  future years. Air Force maintenance officials told us that the reduction in  the stockpile of repair parts generally led to increased repair times in  fiscal year 2013, although the specific duration of those delays was  unknown. The officials also noted that the resulting shortfalls of available  spare parts sometimes delayed maintenance completion on equipment  and weapon systems, thereby reducing the availability of those items to  units for training and operations.
In addition, due to reduced resources in fiscal year 2013, the Navy  postponed or cancelled some planned deployments, which resulted in a  10 percent decrease in its deployed forces worldwide. For example, as  noted above, the Navy delayed the deployment of the USS Harry S  Truman carrier strike group, which according to a Navy headquarters  official reduced the Navy’s presence in the U.S. Central Command’s area  of responsibility to one carrier strike group. This official told us that the  delay of the Truman also affected the deployment of a subsequent carrier  strike group, which decreased the Navy’s ability to respond to  contingency operations.
Furthermore, due to spending reductions in fiscal year 2013, officials from  the Navy’s Pacific Fleet told us they reduced funding for their ship fuel  program, which led to cancelled deployments and reductions to training.  According to Pacific Fleet data on fourth quarter fuel reductions, Fourth  Fleet, which is assigned to support U.S. Southern Command, received  fuel for about 55 percent of its scheduled training and operational  requirements. As a result of fuel and other spending reductions, officials  from Fleet Forces Command and Pacific Fleet told us the Navy cancelled  a number of deployments including:
The USNS Comfort and its supporting medical units, the USS  Kauffman, and a maritime civil affairs team;
The USS Rentz and USS Jefferson City, which would have supported
The USS Pearl Harbor, which would have supported partnership  activities in the region.
section_title: The Services Used Available Funding Flexibilities to Mitigate Some of the Effects of Sequestration Reductions
paragraphs: Based on our review of DOD data and interviews with service component  officials, we found that the services relied on internal prioritization  processes to manage fiscal year 2013 sequestration reductions by  applying reductions to lower-priority areas and also used existing funding  flexibilities, such as reprogramming and transfer authorities to mitigate the  effects of sequestration. By using funds transferred or reprogrammed into  the operational tempo and training category, some service officials  reported being able to fund some unplanned requirements or reverse  some actions initially taken in response to sequestration reductions. For  example, according to DOD reprogramming documents:
As discussed earlier, in July 2013 DOD transferred about $200 million  into the Air Force’s operation and maintenance account to mitigate  shortfalls in its flying hour program. According to Air Combat  Command officials, this action allowed the Air Force to resume some  flying operations for squadrons that had been stood down. Our  analysis of fiscal year 2013 Air Force flying hour data shows that, after  declining from April through June, active duty combat units began  increasing their execution of flying hours in July and August.
DOD transferred about $135 million to the Navy’s operation and  maintenance account to restore some flying hours and support  unbudgeted missions, among other things. According to an official  from the Navy’s financial management office, this funding allowed the  Navy to restore tactical flying hours and fund unbudgeted ship  operations in the Middle East.
The use of transfers and reprogrammings gave the services some  flexibility to manage reductions, but did not allow them to restore some  actions taken in response to the fiscal year 2013 sequestration.  Specifically, Army and Air Force officials told us that because some of the  transferred or reprogrammed funds did not become available until later in  the year, some cancelled exercises and training classes could not be  restored. For example, Army Forces Command officials said that because  of capacity limitations at combat training centers, they would have been  unable to reschedule cancelled exercises even if additional funds had  become available later in the year. Additionally, Air Combat Command  officials described to us the difficulty of spending reprogrammed funds  because of the interrelationship of funding sources and activities. For  example, these officials told us that when transferred or reprogrammed  funds for flight hours became available, the Air Force had to first restore  training for aircrew and maintenance personnel that had lost critical skills  before pilots were able to resume flying hours.
Beginning in fiscal year 2013, some service officials reported taking  actions to help mitigate existing readiness shortfalls that were  exacerbated by sequestration. For example, Army Forces Command  officials told us that in response to concerns about the service’s ability to  surge units during sequestration and only having three brigade combat  teams available to meet surge requirements at the end of fiscal year  2013, the Army created the “Army Contingency Force.” According to DOD  and Army budget documents, the Army Contingency Force will include a  mix of fully trained brigades capable of providing an initial response and  surge capability to respond to emerging requirements. Furthermore, as  part of its ongoing efforts to address concerns about the pace of  operations, length of deployments, and overall readiness, the Navy  recently revised its operational schedule—referred to as the Optimized  Fleet Response Plan—for its carrier strike groups. While this plan is not in  direct response to sequestration, according to Navy documents and  testimony from the Chief of Naval Operations, it is intended to help  mitigate readiness and deployment challenges that were exacerbated by  sequestration by providing more stable operational schedules to ensure  that ships are able to adequately address their training and maintenance  requirements.
section_title: Case Study 2 - Operation and Maintenance Accounts: Services’ Maintenance and Weapon Systems Support
subsections: section_title: Service Components Reduced the Total Enacted Amount of Funding for the Maintenance and Weapon Systems Support Category by About 9 Percent, but the Amount and Percentage Varied by Component
paragraphs: In implementing sequestration, the service components reduced fiscal  year 2013 funding for the maintenance and weapon systems support  category by about $2.7 billion, representing about 9 percent of the service  components’ enacted amounts for the category according to our analysis  of DOD’s budget execution data (see fig. 11).
The active and reserve components allocated varying amounts and  percentages of the fiscal year 2013 sequestration reductions within their  maintenance and weapon systems support category, as shown in figure  12.
The active Army, Navy, and Air Force components generally applied  larger sequestration reduction amounts—in terms of dollars—to the  maintenance and weapon systems support category than did the reserve  components, which reflects the larger size of the active components’  enacted amounts relative to those of the reserve components. The active  component reduction amounts ranged from $0 for the Marine Corps to  about $1.3 billion for the Air Force. Reserve component reduction  amounts ranged from $0 for the Air National Guard to about $125 million  for the Air Force Reserve. However, as also shown in figure 12, the  reductions in percentage terms varied substantially among both the active  and reserve components.
section_title: Reductions Resulted in Effects Related to Costs and Spending, Delayed Time Frames, and Reduced Equipment Availability
paragraphs: Based on our review of DOD’s budget execution data, internal  maintenance records, service guidance, and interviews with maintenance  officials, we found that the service components took steps during the  fiscal year 2013 sequestration to preserve funding for maintenance  activities most directly associated with equipment readiness for those  units deploying or next-to-deploy in support of ongoing operations, and  reduced spending on equipment maintenance for later-deploying units, in  response to a DOD memorandum. As a result of their efforts to reduce  spending on lower-priority maintenance activities for units that were not  deploying in the near term, officials from service component headquarters  and maintenance commands identified some effects related to increased  costs and deferred spending for maintenance delayed to future fiscal  years; delayed time frames associated with completion of ongoing  maintenance during the year; and the reduced availability of equipment,  supplies, and personnel for conducting maintenance work and training,  based on our analysis. These effects varied by component. For example,  the active Army, Navy, and Air Force components reported effects related  to each of those three areas. However, officials from the Marine Corps’  active and reserve components told us there was little to no effect on  equipment maintenance because they utilized supplemental overseas  contingency operations funding to offset sequestration reductions. The  active Marine Corps, in particular, received a large amount of overseas  contingency operations funding for depot maintenance in fiscal year 2013  relative to the amount requested.
subsections: section_title: Equipment Maintenance Deferrals Contributed to Deferred Spending and Possible Cost Increases in Future Years
paragraphs: Some actions the service components took to reduce their expenses in  fiscal year 2013, such as deferring equipment maintenance, contributed  to deferred spending and the potential for increased costs in future fiscal  years. Service maintenance officials told us that from year to year, each  service generally defers some portion of its planned equipment  maintenance for a variety of reasons, such as capacity limitations at  maintenance facilities, operational considerations that postpone the  availability of equipment for maintenance, and requirements that exceed  available funding. According to service officials, the total amount of  deferred maintenance in any given year cannot be specifically attributed  to one factor over another, including sequestration reductions in fiscal  year 2013. However, officials from the Army’s and Navy’s maintenance  commands told us that sequestration reductions contributed to the  following examples of deferred maintenance and spending in fiscal year  2013:
Maintenance officials from Army headquarters reported deferring  about $630 million of costs from fiscal year 2013 to fiscal year 2015 to  perform maintenance on equipment returning from overseas  contingency operations. According to these officials, this amount  included field-level maintenance for 28 aircraft and maintenance  funding for about 13,000 pieces of equipment, or about 9 percent of  the approximately 142,000 equipment items the Army planned to  reset in fiscal year 2013.
Naval Sea Systems Command officials told us they deferred from  fiscal year 2013 to fiscal year 2014 at least 75,000 days of civilian  labor and their associated expense for a variety of major projects,  such as ship and submarine engineering overhauls. Based on our  review of Navy budget documents, this amount represented about  2 percent of the 4.6 million days of labor planned for maintenance in  fiscal year 2013, or the approximate equivalent to shipyard  maintenance on two Los Angeles-class submarines for 6 months  each. U.S. Pacific Fleet officials also told us that maintenance  deferrals into fiscal year 2014 displaced other maintenance planned  for that year on other surface ships or submarines, which in turn  affected those vessels’ availability in the fleet for training and  operations. However, officials could not quantify the precise backlog  of ship and submarine maintenance in 2014 or the affect on training or  deployment schedules due to sequestration as opposed to other  factors.
In connection with the reported instances of deferred spending and  maintenance, Army, Navy, and Air Force officials expect that deferred  maintenance will lead to future increased costs that could not be  quantified at the time of our review. For example, officials from  Headquarters Air Force told us that, within acceptable risk levels, aircraft  continued to fly past their scheduled maintenance time frames in fiscal  year 2013. These officials further explained that they anticipate the future  maintenance and repair will be more expensive because of the additional  wear and tear on the aircraft. Similarly, the Chief of Naval Operations  testified in February 2013 that the cancellation of maintenance for ships  and aircraft will reduce their service lives and increase the likelihood of  breakdowns, leading to a higher cost for those additional future repairs.  In September 2012, we found that the Navy has recognized that deferring  maintenance can affect readiness and increase the costs of later  repairs.studies have found that deferring maintenance on ballast tanks to the  next major maintenance period will increase costs by approximately  2.6 times and a systematic deferral of maintenance may make it cost  prohibitive to keep a ship in service.
section_title: Service Actions Delayed Time Frames for Completing Ongoing Maintenance and Affected Work Scheduled for Future Years
paragraphs: Some actions the service components took to reduce their expenses in  fiscal year 2013, such as furloughing civilian employees and limiting  purchases of spare parts and other supplies, reportedly delayed the  completion of ongoing maintenance and, in some instances, affected time  frames for maintenance work scheduled for future years. For example,  Naval Air Systems Command officials told us that personnel shortfalls  resulting from the 6-day civilian furlough and hiring freeze, among other  factors, contributed to a delay in the completion of planned maintenance  on 43 aircraft and 289 engines in fiscal year 2013. These officials told us  that technicians completed all of the delayed work on those items in 2014,  but that backlog in turn delayed maintenance on other aircraft and  engines that was previously scheduled for fiscal years 2014 and 2015.  Further, Naval Air Systems Command officials stated that recovery from  the work backlog has been slowed by delays in hiring civilian personnel to  restore the total workforce to pre-sequestration levels, which these  officials expected to be complete by June 2015.
In addition to delays in repairing naval aircraft, U.S. Pacific Fleet officials  told us that some of their ships were affected by maintenance delays in  the shipyards. For example, according to these officials, reduced  spending and civilian personnel shortfalls contributed to a two-month  delay in the completion of maintenance on the USS John C. Stennis  aircraft carrier. The officials noted that the delay to the Stennis, along with  other factors, led to a 2-month delay in the start of maintenance work on  the USS Nimitz aircraft carrier, which began in January 2015. However,  U.S. Pacific Fleet officials told us that the delay in the start of  maintenance on the Nimitz did not affect its planned deployment  schedule.
Spending reductions reportedly also contributed to delays in Air Force  maintenance. Specifically, as discussed earlier, officials from two Air  Force commands told us that they reduced spending by limiting their  purchases of spare parts for equipment and weapon system repairs to  those considered essential for fiscal year 2013, and deferred any other   Air Force officials said that the reduction in  purchases to future years.the stockpile of repair parts generally led to increased repair times in  fiscal year 2013, although those time frames were not specifically  quantified.
section_title: Spending Reductions Contributed to Decreased Availability of Equipment for Training and Supplies and Personnel for Conducting Maintenance
paragraphs: Reductions in maintenance funding that the service components  implemented in response to the fiscal year 2013 sequestration  contributed to some reported instances of decreased availability of  equipment for conducting operations and training and shortfalls in  supplies and personnel for performing maintenance. For example,  officials from Naval Air Systems Command stated that the command  reduced funding to perform depot maintenance work and recertification  procedures on over 50 percent of weapons and weapon components  planned at the beginning of fiscal year 2013—including critical missile  systems like the Standoff Land Attack Missile-Expanded Response,  Harpoon, Sidewinder, and Advanced Medium-Range Air-to-Air missiles.  Further, these officials told us that the deferred maintenance on those  approximately 800 missiles and components led to shortfalls in the  availability of weapons for the fleet relative to ship inventory requirements  for operations and training. Consequently, Naval Air Systems Command  officials told us that the reduced availability of ready and certified  weapons and weapon components necessitated transfers of weapons  across ships to conduct planned training and operations with the required  quantity of weapons. These officials noted that the Navy has budgeted for  the completion of this deferred maintenance on weapons and  components in fiscal years 2016 through 2020.
In addition to the reduced availability of some weapons and equipment for  training and operations, reduced maintenance spending led to reported  instances of shortfalls in personnel needed to perform planned  maintenance. Officials from the Air Force’s and Navy’s maintenance  commands stated that a civilian hiring freeze and the 6-day civilian  furlough, due in part to sequestration, affected the availability of  personnel needed to perform maintenance work and related inspections.  For example, Air Force Materiel Command officials reported that the  combined effect of these personnel shortfalls led to depot work backlogs  for aircraft and engine maintenance. Specifically, in an internal command  report on the effects of the civilian furlough, Air Force Materiel Command  estimated that in the fourth quarter of fiscal year 2013, it lost about  1 million hours of production, or 25 percent of its planned capacity. The  lost production hours caused an estimated 33 percent reduction in depot  efficiency and decreased the availability of aircraft to squadrons, including  two aircraft during the fourth quarter that were delayed in being returned  to their squadrons due to the restrictions in personnel overtime. Similarly,  Naval Sea Systems Command officials explained that the hiring freeze  exacerbated a pre-existing problem at Navy shipyards in terms of the  planned maintenance workload exceeding the number and types of  skilled civilian personnel (e.g., engineers) available in the workforce to  perform the maintenance. U.S. Pacific Fleet officials also stated that the  civilian furlough affected the availability of diesel engine inspectors and  delayed by about 1 month the completion of maintenance on the USS  Comstock amphibious dock landing ship, from August to September  2013. According to these officials, however, the delay in maintenance did  not affect the ship’s planned deployment schedule in 2014.
section_title: The Services Focused Reductions on Equipment Maintenance Activities for Later-Deploying Units and Used Available Flexibilities to Mitigate the Effects of Sequestration
paragraphs: Officials with the military services told us that, in response to a DOD  memorandum, they generally focused fiscal year 2013 spending  reductions on repairs for equipment recently returned from deployment.  For example, our analysis of fiscal year 2013 budget execution data  showed that, as a result of sequestration and transfer or reprogramming  actions, the Army applied substantial reductions to its equipment reset  program, which restores equipment returning from overseas contingency  operations for use by later-deploying units. Army budget officials told us  they distributed the transferred and reprogrammed reset program funds to  other emergent or higher priority activities or programs. Our analysis  showed that together, the reprogramming and sequestration reductions  decreased the reset program by about $1.7 billion relative to the fiscal  year 2013 enacted amount of about $3.7 billion for the program. In  contrast, the Army reduced funding for the base budget portion of its  maintenance and weapon systems support category—which funds depot  maintenance on equipment for deploying units—by only about 1 percent  relative to the base enacted amount for fiscal year 2013 of $1.6 billion.
The services also told us the use of existing funding flexibilities helped  mitigate some negative effects from fiscal year 2013 sequestration- related spending reductions to maintenance and weapon systems support  programs. For example, Navy officials told us that they applied funds  transferred or reprogrammed from other accounts or activities to the  maintenance and weapon systems support category to perform  maintenance projects on eight ships that were originally targeted for  deferrals in the beginning of fiscal year 2013. In addition, Naval Air  Systems Command officials told us that the Navy transferred or  reprogrammed about $4.9 million from other sources to fund urgent  aircraft maintenance for the Navy Reserve—work that was expected to be  deferred due to initial sequestration reductions in fiscal year 2013 funding.
Our review of service documentation and interviews with officials showed  that the services took a number of other steps to mitigate the effect of  fiscal year 2013 sequestration reductions on their maintenance and  weapon systems support activities. For example, officials from Naval Sea  Systems Command told us they frequently leveraged a pre-existing  process, which they referred to as “rebaselining,” in fiscal year 2013 to  better align the shipyards’ workforce and capacity with the top priorities  for maintenance within their workload. “Rebaselining” is a process of  changing the cost, schedule, or performance associated with  maintenance workloads. These officials stated that they utilized the  rebaselining process more often in fiscal year 2013 than in prior years as  a way to mitigate some effects of sequestration and fiscal uncertainty on  the decreased availability of certain maintenance personnel due to hiring  freezes and restrictions on overtime work. Additionally, these Naval Sea  Systems Command officials reported that they petitioned for and received  an exemption for shipyard workers from the civilian furlough, which  protected a substantial portion of the shipyard workforce from the  disruption of furlough days. Officials believe this furlough exemption also  enabled them to maintain a substantial level of shipyard productivity.
To reduce the effect of sequestration reductions, the Army temporarily  reduced the standard at which non-deployed units were required to  maintain their equipment, including vehicles, in fiscal year 2013, while still  ensuring those items were safe to operate. The change in standard  enabled unit commanders to reduce their expenses by delaying the  purchase of repair parts and maintenance costs. According to Army  maintenance officials, in fiscal year 2013, the Army also created the Army  Maintenance Sequestration Working Group to assess depot workload  requirements, reprioritize available funding, and make recommendations  for reprogramming actions to meet Army equipment maintenance  requirements within the budgetary constraints imposed by sequestration.  However, Army officials told us that after fiscal year 2013, they no longer  needed this working group and returned to managing the prioritization of  budgetary resources for maintenance resources through preexisting  processes.
section_title: Case Study 3 - Operation and Maintenance Accounts: Service Components’ Base Operating Support
subsections: section_title: Service Components Reduced the Total Enacted Amount of Funding for the Base Operating Support Category by About 11 Percent, but the Amount and Percentage Varied by Service Component
paragraphs: In implementing the fiscal year 2013 sequestration, the service  components reduced fiscal year 2013 funding for the base operating  support category by about $3.8 billion, representing about 11 percent of  the service components’ total enacted amount for the category according  to our analysis of DOD’s budget execution data (see fig. 14).
The active and reserve components allocated varying amounts and  percentages of the fiscal year 2013 sequestration reductions within their  respective base operating support categories, as shown in figure 15.
The active components of the Army, Navy, and Air Force generally  applied larger sequestration reduction amounts—in dollar terms—within  the base operating support category than did the reserve components,  which reflects the larger size of the active components’ enacted amounts  for base operating support relative to those of the reserve components.  The active components’ reduction amounts for base operating support  ranged from $30 million for the Marine Corps to $1.4 billion for the active  Army. The reserve components’ reduction amounts to base operating  support ranged from $0 for the Air Force Reserve to $102 million for the  Army National Guard. As also shown in figure 15 above, the active  components’ reduction to the category as a percentage of the enacted  amount ranged from about 1 percent to nearly 15 percent and the reserve  components’ reduction ranged from 0 percent to about 21 percent.
section_title: Reductions Resulted in Effects Related to Deferred Spending and Costs, Delayed Time Frames, and Reduced Equipment and Personnel Availability
paragraphs: Based on our review of DOD’s budget execution data, internal briefing  documents and reports, service guidance, and interviews with installation  management officials, we found that the service components took steps  to preserve their operating support activities over infrastructure-related  functions within the base operating support category while implementing  sequestration in fiscal year 2013. In particular, service installation  management officials told us that they protected funding for certain  operating support functions that they considered essential, such as facility  leases, utilities, and civilian salaries. These officials also told us that, in  response to a DOD memorandum, they prioritized base operating support  expenses that were related to family programs and warfighter support.  For example, to ensure child development centers—a type of family  program—had enough care providers to maintain accreditation, DOD  exempted personnel working at these centers from the 6-day civilian  furlough.
Officials with most of the active and reserve service components  identified some effects resulting from sequestration reductions, but some  installation management officials we interviewed told us that they were  not aware of significant negative effects within their command or  component. For example, installation management officials we  interviewed from four of eight Air Force active component commands  reported to us that they were able to accomplish their missions in fiscal  year 2013 without any critical disruptions to the delivery of base operating  support services. Also, budget and installation management officials from  the Marine Corps and Marine Corps Reserve told us that there were no  significant effects to base operating support due to sequestration. Other  active and reserve components reported to us that they reduced funding  for their lower priorities, such as infrastructure projects they considered  non-essential (e.g., repairs or other projects not related to the protection  of health or safety). As a result of their efforts to reduce spending on  lower-priority activities within the base operating support category in fiscal  year 2013, active and reserve component officials identified certain  negative effects that, based on our analysis, were generally related to  deferred spending to a subsequent fiscal year, delayed time frames for  completing infrastructure projects and repairs, and the reduced availability  of personnel, equipment, and facilities for performing some emergency  response duties or training and operations.
subsections: section_title: Deferral of Base Operating Support Contracts and Infrastructure Projects, as well as Compressed Time Frames for Contract Awards, Led to Deferred Spending and Possible Cost Increases in Future Years
paragraphs: Officials we interviewed from 7 of the 10 service components told us they  deferred spending on some base operating support contracts,  infrastructure projects, or both as a result of fiscal year 2013  sequestration reductions. According to these officials, the deferred  spending shifted the planned costs for those activities and projects to  future fiscal years. Six of eight active component Air Force commands  that we interviewed reported that they cancelled or changed the terms of  some base service contracts to reduce their fiscal year 2013 expenses for  services such as dining, custodial services, or grounds keeping, and  deferred some of those contract costs into fiscal year 2014. For example,  according to an internal summary report by Air Force Materiel Command,  the command adjusted some service contracts for its bases, including  one for a dining facility on Robins Air Force Base that deferred  $1.9 million of planned costs in fiscal year 2013 to fiscal year 2014.
In some instances, the service components’ deferrals of infrastructure  spending in fiscal year 2013 may lead to increased costs that cannot be  determined at this time. For example, according to installation  management officials from the Army and internal reports, the Army  deferred a substantial amount of infrastructure-related spending from  fiscal year 2013 to future years. Specifically, our analysis of budget  justification and execution data showed that the Army reduced its fiscal  year 2013 base funding for facilities sustainment projects—including  preventive maintenance and repairs—by nearly $1 billion. This amount  represented about 40 percent of its base budget request for fiscal year  2013 sustainment projects. Officials from the Army’s installation  management command told us that the negative effects of reduced  sustainment funding and preventive maintenance on service-wide  infrastructure conditions and their expected life spans are not immediately  apparent and will be unknown for several more years. Moreover, the  amount of future increased costs that may be needed to restore  infrastructure to required conditions was also undetermined at the time of  our review. However, officials stated that reductions to preventive  maintenance and repairs eventually necessitate increased investment to  repair or replace deteriorated infrastructure or to demolish facilities that  are no longer safe or require cost-prohibitive restoration. This is  consistent with our prior work. In April 2008 and May 2009, we found that  deferring sustainment of DOD facilities will likely result in continued facility  deterioration and higher future costs.
In addition, the services identified some instances of compressed time  frames for awarding operating support and infrastructure contracts that  may have led to higher contract costs. According to Army, Navy, and Air  Force officials, uncertainty about funding levels for base operating  support for much of fiscal year 2013 was exacerbated by sequestration.  The duration of this uncertainty about base operating support budgets  reduced the amount of time available for commands to award many of  their contracts relative to the available time in prior years. For example,  the Navy awarded about $570 million worth of various facilities  sustainment, restoration, and modernization contracts within the last  2 weeks of fiscal year 2013. This amount represented a 10 percent  increase over the dollar amount of contracts awarded during the same 2- week period of the prior year. Navy and Air Force officials told us that the  limited time they had to review and negotiate contracts likely resulted in  some higher prices, but stated that those additional costs cannot be  determined.
section_title: Delaying the Completion of Infrastructure Projects to Future Years Exacerbated Preexisting Backlogs
paragraphs: Officials from 7 of 10 service components told us or reported to DOD that  they delayed the completion of infrastructure projects and repairs in fiscal  year 2013 due to sequestration reductions. According to these officials,  the delayed work exacerbated existing backlogs and in turn contributed to  deferrals of other repairs and projects in fiscal year 2014.
Service component officials told us that, from year to year, they generally  defer some portion of infrastructure projects for a variety of reasons, such  as the emergence of other competing priorities, the inability to design and  execute projects during the year due to complications that arise (e.g.,  weather delays or environmental effect considerations), and requirements  that exceed available funding. According to service installation  management officials we spoke with, the total dollar amount or quantity of  deferred infrastructure projects in any given year cannot always be  attributed specifically to one factor over another, including sequestration  reductions in fiscal year 2013. However, these officials also told us that  sequestration-related spending reductions contributed to their decisions  to defer facility maintenance and projects in fiscal year 2013, thus  exacerbating an already growing backlog of projects and repairs over the  past years. For example, Army installation management officials told us  that certain utilities modernization and upgrade projects were not  completed in fiscal year 2013 as a result of sequestration and the lower  priority assigned to those types of projects compared to others related to  health or safety, such as airfield runway repairs. Likewise, the Air Force  and Navy told us that they deferred some energy efficiency projects that  were expected to lead to longer-term savings and expedite the  achievement of energy savings goals.
According to testimony by the Chief of Staff of the Army in November  2013, sequestration reductions that the Army applied to its facility  sustainment funding in particular, which totaled about $1 billion,  contributed to a backlog of approximately 158,000 maintenance work  orders at the end of fiscal year 2013—an estimated 500 percent increase  over the prior year. However, Army installation management officials  told us that the estimated number of unfilled work orders may understate  the value and quantity of maintenance that was not performed in 2013  because the Army conveyed informal guidance directing base personnel  to refrain from submitting non-essential work order requests that year due  to the limitations on available sustainment funding across installations.
Similarly, officials from the eight active-component Air Force commands  that we interviewed and the Air National Guard reported various delays to  routine maintenance, repairs, or infrastructure inspections related to  reductions to sustainment funding. For example, Air Force Special  Operations Command officials told us that some recurring tasks, such as  airfield vegetation clearing and runway rubber removal and re-striping,  were delayed to fiscal year 2014 to accommodate more urgent tasks or  projects. They explained that this in turn contributed to the delayed  completion of facility repair and construction projects that were planned  for that year. Air Combat Command officials also reported that they  delayed infrastructure inspections planned for two of the command’s  bases in fiscal year 2013 by 1 year because of reduced funding. As a  result, officials stated that they had to prioritize those bases’ infrastructure  projects based on outdated facility condition assessments and the  projects likely received lower priority for funding than others for which  more current assessment ratings were available.
section_title: Spending Reductions to Base Operating Support Led to Some Shortfalls in Availability of Certain Personnel, Equipment, and Facilities
paragraphs: Fiscal year 2013 sequestration-related spending reductions led to some  shortfalls in personnel, equipment, and facility availability for certain base  operating support functions and programs, which increased program risks  and caused some disruptions to training and operations. For example,  five of eight active component Air Force commands reported to us that  some of their installations experienced reduced fire and emergency  response personnel or related equipment, fewer security force personnel  and vehicles than needed, or both. Air Force officials said the shortfalls  decreased their response capability for responding to critical incidents like  aircraft fires or fuel spills, and to the air base defense program. However,  officials were unable to quantify the specific number of personnel  shortfalls or risk based on decisions to reduce funding for these base  services.
Additionally, Air National Guard officials told us that sequestration  affected the availability of some facilities for training. Specifically, Guard  officials stated that they anticipated and planned for a sequestration  reduction of about 35 percent (approximately $100 million) to the  component’s infrastructure budget in fiscal year 2013. As a result of the  expected budget reduction, the Air National Guard withheld facilities  sustainment funding and reduced expenses. According to officials, these  reductions, compounded by civilian personnel shortfalls due to the 6-day  furlough, delayed the availability of certain facilities for training purposes  until later in the fiscal year when the Guard allocated additional funds to  its infrastructure budget.
According to internal Navy briefings and summaries provided to service  leadership, sequestration reductions to base operating support funding  and the reduced availability of civilian personnel due to sequestration- related hiring freezes or furloughs led to decreased capacity in port and  airfield operations. For example, across installations, port operations were  restricted to normal business hours unless a flag officer exemption was  granted to permit after-hours access. This restriction in turn led to some  increased costs associated with additional steaming time for ships that  arrived late or early to port. Specifically, Naval Surface Force Atlantic  calculated that it cost the command an additional $135,000 for three ships  to auxiliary steam when they could not connect to shore power because  of the port-hour restrictions.
section_title: Service Components Focused Reductions toward Lower-Priority Infrastructure Projects and Used Available Flexibilities to Mitigate Some Effects of Sequestration
paragraphs: Service officials told us they applied the fiscal year 2013 sequestration  reductions more heavily toward funding for infrastructure projects that  they considered to be non-essential as opposed to funding for certain  operating support services, such as facility leases and utilities. The  service components’ sequestration reduction to infrastructure-related  subactivity groups (about $2.8 billion) was nearly three times higher than  the reduction amount applied to operating support subactivity groups  (approximately $1 billion).
Based on our interviews with service budget officials and our review of  budget execution data, the services also relied on existing funding  flexibilities, such as transfer and reprogramming authorities, to mitigate  the effects of sequestration on base operating support. In fiscal year  2013, the service components collectively transferred or reprogrammed  about $1.5 billion of funds from other budget activities or accounts to the  base operating support category. Service budget office officials told us  that the additional funds enabled them to restore funding to some  activities or projects that had been initially reduced or cancelled, as well  as to fund emergent priorities that were not factored into the budget.
Transfers or reprogramming of funds into the base operating support  category sometimes reflected the services’ decisions to reprioritize and  invest in infrastructure. For example, Army Reserve officials told us that  funds transferred or reprogrammed into its infrastructure subactivity group  within the base operating support category helped mitigate the effects of  reductions to infrastructure funding earlier in the year that were made in  planning for sequestration. In addition, officials from the Navy’s budget  office told us they utilized transferred or reprogrammed funds from other  areas of their budget to reinvest in facilities and other infrastructure during  the fourth quarter of fiscal year 2013 at the behest of Navy leadership due  to the critical importance of port and airfield conditions to fleet readiness.  Transfers or reprogramming actions, as well as the receipt of some  supplemental funding that Congress appropriated for disaster relief  activities in the aftermath of Hurricane Sandy, contributed to the service  components’ combined end-of-year obligation rate of about 98 percent  relative to the amount enacted for the base operating support category.
However, service installation management officials emphasized to us that  the timing of these transfer or reprogramming actions and the subsequent  availability of these funds limited the time available that they had to apply  these funds to areas of greatest priority before the end of the fiscal year.
The services took other actions in response to DOD’s guidance on  implementing the fiscal year 2013 sequestration that helped them mitigate  the effect of reduced resources on base operating support. For  example, service installation management officials told us that they used  mechanisms outlined in a DOD memorandum to request certain  exceptions to civilian personnel furloughs, or to recall civilians from  furlough, in order to mitigate personnel shortfalls in operating support  services (among other areas) on a limited basis. This memorandum  permitted requests for exceptions to the furlough to provide additional  personnel to fulfill emergency services shortfalls and, as noted earlier, to  ensure child development centers had enough care providers to maintain  accreditation, among other things. In addition, the Army allowed borrowed  military personnel to perform duties to mitigate reported shortfalls in base  operating support personnel, such as gate guards and groundskeepers.  In a February 2013 memorandum signed by the Assistant Secretary of  Defense for Readiness and Force Management, DOD recognized the risk that the use of borrowed personnel may pose to readiness and training.
The Secretary of the Army echoed this point in a March 2013  memorandum.
section_title: Case Study 4 - RDT&E and Procurement Accounts: Selection of DOD and Military Service Acquisition Programs for Weapon Systems
subsections: section_title: DOD and the Services Reduced their Budgetary Resources for RDT&E Accounts by About 8 Percent and Procurement Accounts by About 7 Percent and Applied a Larger Share of the Reductions to Fiscal Year 2013 Funds than to Prior Year Unobligated Balances
paragraphs: Total fiscal year 2013 sequestration reductions for the RDT&E and  procurement accounts were about $6.1 billion and $9.8 billion,  respectively, which was a reduction of about 8.1 percent and 6.7 percent  of the 2013 sequestrable base, and included both fiscal year 2013  funding and prior year unobligated balances, according to our analysis of  DOD’s budget execution data (see fig. 17).
Within the combined RDT&E and procurement accounts, DOD (in the  defense-wide accounts) and the military services took sequestration  reductions from either fiscal year 2013 funds, prior year unobligated  balances, or a combination of the two. Within the RDT&E accounts, about  90 percent ($5.4 billion) of the sequestration reduction came from fiscal  year 2013 funds, while the remaining $633.2 million came from prior year  unobligated funds, as illustrated in figure 18. Also as shown in figure 18,  the overwhelming majority of RDT&E sequestration reductions across all  DOD components were from fiscal year 2013 funds.
Within the procurement accounts, about 58 percent ($5.7 billion) of the  sequestration reduction came from fiscal year 2013 funds, while the  remaining $4.1 billion came from prior year unobligated funds, as  illustrated in figure 19 below. As also shown in figure 19, the Army and  Navy, while taking vastly different amounts of reductions in terms of  dollars, took approximately equal proportions from their fiscal year 2013  funds and prior year unobligated balances while the majority of the Air  Force and defense-wide reductions came from fiscal year 2013 funds.
In our case study selection of the acquisition programs associated with  19 weapon systems, we found the fiscal year 2013 sequestration reduced  either RDT&E or procurement funds or a combination of the two, based  on our analysis of DOD data. Specifically, sequestration reduced RDT&E  funds for 19 of the weapon systems by $713 million and it reduced  procurement funds for 16 of the weapon systems by a total of  $2.2 billion.
DOD and the services took those sequestration reductions from a  combination of fiscal year 2013 funds and prior year unobligated balances  for 16 of the 19 weapon systems in our case study. All 19 weapon  systems we reviewed used fiscal year 2013 funds to cover some portion  of the sequestration reductions. Likewise, 16 weapon systems used  available prior year unobligated balances to cover some of the  sequestration reduction. Table 2 provides details on the sequestrable  base, sequestration reduction, and the source of funds of the reduction  for each of the 19 weapon systems in our case study.
section_title: Program Officials Identified Increased Weapon System Cost, Delayed Time Frames, and Decreases in System Availability
paragraphs: Officials associated with the majority of the 19 weapon systems we  reviewed in our case study of the RDT&E and procurement accounts  reported experiencing unplanned effects on their programs due, in part, to  the fiscal year 2013 sequestration. As many programs aimed to preserve  high priorities, such as procurement quantities, the effects of  sequestration were still sometimes felt in other areas of the acquisition  process. Specifically, RDT&E and procurement program officials across  the services identified effects that can be categorized into three primary  and interrelated areas—costs and spending, time frames, and system  availability. In general, the effects may be interrelated as the development  of one effect may have led to the occurrence of others. Additionally, some  program officials noted that their weapon system programs may  experience potential future effects due to sequestration. Table 3 shows  the 19 weapon systems we reviewed and the categories of identified  sequestration effects to those systems’ acquisition programs.
Overall, officials from acquisition programs associated with 4 of the  19 weapon systems we reviewed identified effects in all three  categories.2013 sequestration had no immediate effects—the Air Force’s KC-46  Tanker and the joint Air Force and Navy F-35 Joint Strike Fighter.  Officials from the acquisition programs for both of these weapon systems  stated that they were financially positioned to manage the sequestration  reductions and withstand immediate effects. For example, officials stated  the KC-46 was protected from any detrimental effects as they had built in  buffer dollars that were initially set aside for potential risk incurred for  changes in contracts and/or testing. This shielded them from potential  sequestration reductions. According to KC-46 officials, the sequestration  reduction of $143 million in RDT&E dollars was covered solely by fiscal  year 2013 funds that were available due to a combination of unused  engineering change orders and savings from an Aircrew Training System  contract that was much lower than anticipated.
subsections: section_title: Effects Related to Costs
paragraphs: Officials from acquisition programs associated with 4 of the 19 weapon  systems we reviewed indicated increased costs to particular aspects of  their activities were due, at least in part, to the fiscal year 2013  sequestration. For example:
Air Force F-15 officials reported that sequestration resulted in late  completion and delivery of software development to the integrating  contractor. This, in turn, resulted in increased costs to particular  aspects of its programmatic activities. According to program officials,  the program is currently in negotiations on the exact dollar amount of  these increased costs, but the contractor is seeking $4.2 million.  Ultimately, according to these officials, the Air Force would have to  pay the negotiated amount to the contractor.
Navy P-8A Poseidon officials reported that sequestration, in  combination with congressional reductions, led to delays in depot  maintenance repair capabilities that are anticipated to result in cost  savings. According to the officials, the delay in establishing these  depot capabilities will defer such cost savings, resulting in a  cumulative increase in overall lifecycle costs of $191 million, of which  $56.7 million was directly attributed to sequestration.
Navy Littoral Combat Ship officials reported possible future effects  due to the fiscal year 2013 sequestration, which reduced its budget for  ship construction changes. As a result, more expensive design  changes may be carried out subsequent to delivery to the Navy, as  the cost to execute these changes at a later stage will be higher.
section_title: Effects Related to Delayed and Modified Time Frames
paragraphs: Officials from acquisition programs associated with 15 of the 19 weapon  systems we reviewed reported experiencing delays due in part to the  fiscal year 2013 sequestration. These included delays in testing,  procurement, modernization efforts, and contract awards. For example:
Army Apache AH-64E officials stated that the combined effects of the  fiscal year 2013 sequestration and the continuing resolution affected  the timeline for acquisition decisions for the AH-64E Apache in fiscal  years 2013 and 2014 and fiscal year 2014 aircraft procurements,  which resulted in contract changes and delays to time frames for  evaluating and negotiating the system’s contract.
Navy CH-53K officials reported that sequestration reductions  contributed to a two-month delay to the program’s schedule, including  the start of low-rate initial production, where small quantities of the  system are produced for testing and evaluation before producing  greater quantities for fielding. These officials told us the delays  affected acquisition milestones and the fielding of a more capable  helicopter, and estimated that sustaining the program for an additional  2 months would increase estimated program costs by about  $20 million to $30 million.
Navy AIM-9X Block II officials did not report an immediate effect due  to the fiscal year 2013 sequestration. However, program officials  stated that certain obsolescence redesign activities for outdated  software and hardware and procurement of additional missile  telemetry equipment were deferred because of sequestration  reductions, which they indicated could result in a future production  gap.
section_title: Effects Related to System Availability
paragraphs: Officials from acquisition programs associated with 9 of 19 weapon  systems we reviewed reported experiencing reduced or deferred system  development or procurement efforts as a result of fiscal year 2013  sequestration reductions, which in turn delayed the release of these  enhanced systems to the warfighter. For example:
Space Based Infrared System High (SBIRS High) officials stated  that budget constraints from a $7.1 million sequestration reduction to  procurement funds, along with the then-ongoing fiscal year 2013  continuing resolution, led them to re-plan their mobile acquisition  strategy, which resulted in the procurement of fewer mobile ground  platforms to meet full operational capability.order to ensure the SBIRS High system maintains capabilities under  applicable threat environments, five upgraded mobile ground  platforms are required. However, due to the re-plan and sequestration  reductions, SBIRS High now has three mobile ground platforms.  According to officials, the loss of two platforms reduces the ability of  SBIRS High s to meet overall requirements.
According to officials, in
Army MQ-1C Gray Eagle unmanned aircraft system officials told us  that a reduction in procurement funds due to sequestration resulted in  deferrals and delays for procuring a number of upgrades to the  system, including radio upgrades, new shipping containers, and an  engine lifetime extension. These deferrals could, in turn, delay the  eventual fielding of the upgraded aircraft to the warfighter, since they  increase the risk that the system may not receive necessary  certifications that it is safe and suitable for use.
Navy H-1 officials stated that the Marine Corps helicopter fleet will rely  on some older aircraft longer than originally intended. This delayed full  fielding of H-1 capability means that the warfighter may have to meet  some missions through continued use of legacy aircraft.
section_title: Existing Priority-Setting Processes Were Used to Manage Sequestration Reductions, with Budget Flexibilities and Additional Appropriated Funds Helping Offset Some of the Reductions
paragraphs: Officials from acquisition programs for the 19 weapon systems we  reviewed stated that their programs did not develop or implement  sequestration-specific mitigation processes to manage fiscal year 2013  sequestration effects, but instead relied on internal prioritization  processes and existing funding flexibilities. Prior to DOD finalizing  sequestration percentage reductions, these program officials relied on  existing priority-setting processes to determine what requirements  necessitated immediate funding and what could be delayed. For a  majority of the systems we reviewed, program officials stated the process  was aimed at avoiding production breaks, procurement reductions,  schedule effects, or fielding of capabilities. Prior to the finalization of the  actual sequestration percentage, according to some program officials,  programs were executing drills on a range of potential percentage (e.g.  10 to 30 percent) cuts to determine what priorities would be funded,  deferred or eliminated and the overall effect that decision would have on  the program. According to multiple program officials for the weapon  systems we reviewed, this re-prioritization of requirements allowed  officials to consider how best to prepare to manage the funding  reductions to their programs.
DOD and the services also utilized available budgetary processes to  manage fiscal year 2013 sequestration reductions to the RDT&E and  procurement accounts. Management actions included use of transfers or  reprogrammings, use of fiscal year 2013 funds, and future year budget  requests. For example, according to Navy officials, they used a  combination of a $127 million reprogramming in fiscal year 2013 and an  additional $227 million of appropriated funds provided in fiscal year 2014  to directly counter sequestration’s effects on the Virginia Class  submarine. In fiscal year 2013, the Navy’s DDG 1000 also received a  reprogramming in the amount of $70.3 million, which helped address  funding shortfalls caused by the fiscal year 2013 sequestration. However,  program officials reported that some effects, such as the delayed  exercising of a contract option, had already been realized. According to  program officials, the Air Force’s KC-46 managed its $143 million  sequestration reduction by utilizing existing fiscal year 2013 funds.  Similarly, SBIRS High officials stated that they requested additional funds  in the fiscal year 2015 Presidential Budget to help offset fiscal year 2013  sequestration reductions.
While the acquisition programs for the weapon systems we reviewed may  have received additional RDT&E and procurement funding through  reprogramming, transfers, or other means, the provision of those funds  might not have entirely eliminated effects to those programs. For  example, according to officials, the subsequent reprogramming alleviated  but did not entirely eliminate an effect to SBIRS High. As noted above,  according to program officials, the Air Force procured fewer SBIRS High  ground vehicles than originally planned. However, program officials also  expected a $44.2 million RDT&E sequestration reduction that would have  forced delays to the completion of the ground element, which was  considered unacceptable. Air Force officials stated that to address this  concern they took funds from other programs to provide SBIRS High with  additional funding. These officials said that doing so restored funding to  the cost estimate necessary to preserve the ground vehicle completion  schedule. According to officials, reprogramming was also used to restore  sequestered funding for operational capability of a parabolic dish sub- system antenna for the program’s sustainment lab. These officials  explained that the absence of the antenna would have reduced  operational capability due to use of one operational vehicle to conduct  any modification testing.
In fiscal year 2013, the procurement accounts for the Air Force, Army,  and Navy had approximately $2.0 billion of fiscal year 2013 funds  transferred out from their procurement lines and realigned for other  military needs. For RDT&E accounts across the services, $345.6 million  of fiscal year 2013 funds was transferred out from their RDT&E lines and  realigned for other military needs, according to budget documentation.  The movement of those funds could have been in response to  sequestration or for other reasons. Irrespective of the services’ motives  for reprogramming the funds, the programs that received the funds could  then apply them to the areas of the program that were affected by the  fiscal year 2013 sequestration.
Based on our analysis, by the end of fiscal year 2013, acquisition  programs for 3 of the 19 weapon systems we reviewed had additional  funds transferred or reprogrammed into them (Virginia class submarine,  DDG 1000 and F-35). By contrast, programs for 3 other weapon systems  had their funding reduced as a result of transfers or reprogrammings (AH- 64E Apache, F-15 and F-22). Acquisition programs for the remaining  13 weapon systems neither received nor forfeited funds as a result of  transfers or reprogrammings. While the specific reasons for these  transfers or reprogrammings for AH-64E Apache, F-15 and F-22 were not  transparent, we could determine through budget analysis that, as noted  above, the Navy’s Virginia class submarine and DDG-1000 received  transferred or reprogrammed funds to mitigate shortfalls created by the  fiscal year 2013 sequestration. Also, according to F-15 officials, their  fiscal year 2013 RDT&E and procurement funding were decreased by a  transfer of $10 million and $14.0 million, respectively, to provide funding  for critical readiness shortfalls resulting from sequestration, specifically to  pay for Air Force Operation and Maintenance shortfalls.
section_title: Case Study 5 - Military Construction Accounts: DOD and Military Services’ Major Military Construction Projects
subsections: section_title: DOD and Certain Service Components Reduced Their Budgetary Resources for Military Construction Accounts by About 4 Percent
paragraphs: Sequestration reductions to the military construction accounts in fiscal  year 2013 totaled about $821 million, which represented a reduction of  about 4 percent of the sequestrable base. Sequestration reduced  budgetary resources within the military construction accounts of four  military service components—Army Reserve, Army National Guard,  active Navy, and Navy Reserve—and the defense-wide military  construction account. By contrast, because the military construction  accounts of the active Army, the active Air Force, Air Force Reserve, and  Air National Guard had appropriated amounts significantly lower than the  baseline set by the Office of Management and Budget, no sequestration  reductions were made for those four accounts.
DOD officials told us that the fiscal year 2013 sequestration reductions  were applied evenly at the project level for major military construction  projects and the budget activity level for other items like minor  construction and planning and design within each of the affected military  construction accounts. Accordingly, each applicable service component and the defense-wide account were given a fixed percentage by which  the funds for each project and budget activity in their military construction  accounts would be reduced.
As shown in figure 21, about 74 percent ($604 million) of the $821 million  fiscal year 2013 sequestration reduction was applied to major military  construction projects. The remaining balance of sequestration reductions  was applied to line items such as minor construction and planning and  design. Of the $604 million reduction applied to major military  construction projects, 58 percent consisted of defense-wide projects, and  42 percent were military service component projects.
The five military construction accounts that experienced sequestration  reductions had a total of 1,385 major military construction projects among  them. The reductions to individual military construction projects varied by  account and ranged between 3 percent and 8 percent. Applying these  percentage reductions, reductions in individual major military construction  projects ranged between approximately $1,000 and $23 million. Figure 22  shows the distribution of reductions across major military construction  projects subject to sequestration. More than 50 percent of the  1,385 major military construction projects subject to sequestration had  reductions of less than $100,000.
section_title: No Military Construction Projects Were Cancelled, Deferred, or Reduced in Scope Because of Sequestration, But Some Delays in Awarding Projects Can be Attributed to Sequestration
paragraphs: Prior to implementing the sequestration reductions in March 2013, the  Office of the Under Secretary of Defense (Comptroller) directed that,  among other things, the scope of military construction projects should not  be reduced and projects should not be deferred or cancelled due to  sequestration. Consistent with this, officials from all four of the service  components and the defense-wide account that had military construction  projects subject to sequestration reductions told us that no projects were  reduced in scope, deferred, or cancelled.
While DOD and service component officials reported no cancellations,  deferrals, or reductions in scope for their military construction projects,  some component officials attributed delays in awarding contracts for fiscal  year 2013 construction projects to sequestration, among other things.
DOD and service officials said that planning for and implementing the  sequestration reductions in fiscal year 2013 required significant staff  labor, and they had less time to prepare requests for proposals and  review bid submissions for projects. Service component officials told us  that sequestration contributed to an increased number of contracts for  projects that were not awarded in the fiscal year in which they were  funded, and officials told us it is a best practice to award all contracts in  the same fiscal year in which the project is funded. For instance, the Navy  reported that 33 active component projects were not awarded contracts in  fiscal year 2013 out of 54 projects funded. By comparison, in fiscal year  2012, 17 of the active Navy’s 57 funded projects were not awarded  contracts and were instead awarded in the next fiscal year. Some service  component officials told us that delays in awarding fewer contracts for  projects than planned could lead to delays in project completion and  increased costs to the projects affected, but were unable to quantify the  longer-term effects on time frames or costs.
section_title: Funding Flexibilities Were Used to Offset the Sequestration Reductions, but May Be Unavailable to Mitigate Future Budget Reductions
paragraphs: Service component and defense-wide officials told us that using available  funding flexibilities to reprogram funds helped to mitigate the effect of  fiscal year 2013 sequestration reductions, but also stated that bid savings  used as a source of reprogrammings may be unavailable to mitigate  future budget reductions. In an effort to minimize the effect of  sequestration on military construction projects, in May 2013 the Office of  the Under Secretary of Defense (Comptroller) provided verbal direction  that available bid savings should be reprogrammed to the extent possible  for projects requiring additional funds. Further, according to DOD’s verbal  guidance, each construction project should be assessed to determine if it  could absorb a sequestration reduction, could be completed with below  threshold reprogrammings, or would require prior congressional approval  for above threshold reprogrammings.
Our analysis of DOD’s reprogramming data for the military construction  accounts showed, in line with the May 2013 direction, that the source for  these reprogramming actions consisted primarily of available bid savings  from projects appropriated in fiscal years prior to 2013. DOD and  service officials stated that they were able to absorb the effect of  sequestration reductions by executing reprogrammings of bid savings  from prior year projects. Further, we found that the use of bid savings was  more frequent in fiscal year 2013 than in fiscal year 2009 through 2012.  For example, in fiscal year 2013, the Navy had 35 military construction  projects that required prior approval reprogrammings because of  sequestration reductions, whereas in fiscal years 2009 through 2012 the  Navy had only 11 total prior approval reprogrammings. DOD and service  officials partly attributed this increase in the use of reprogrammings to  sequestration.
Bid savings constituted the primary source of funding for reprogrammings  in fiscal year 2013. However, DOD and service officials told us that they  expect bid savings to accrue at a diminished rate in the future, which  could affect their ability to mitigate future budget constraints through this  means. Based on our review of DOD data, DOD and the services accrued  about $2.4 billion in bid savings in fiscal year 2009, and in fiscal year  2014 they accrued $240 million. Some service officials told us that they  attributed the decline to, among other things, a less favorable  construction market, and they expect the downward trend in bid savings  to continue because of market conditions. In addition, based on our  review of DOD data, though the total bid savings accumulated between  fiscal year 2009 and fiscal year 2014 was about $8.1 billion, more than  $7.3 billion was used for a variety of purposes, including offsetting the  fiscal year 2013 sequestration reduction of about $821 million, as well as  rescissions, reductions and other expenses such as project cost  overruns. According to DOD data and officials, this has reduced DOD’s  accumulated bid savings and left about $790 million that DOD plans to  use for other known expenses. As a result, DOD and service officials told  us they would likely be unable to absorb another sequestration reduction  of equal or greater size on their military construction accounts, and  without the ability to use bid savings to offset future reductions, they  would have to defer, cancel, or reduce the scope of projects.
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: The joint explanatory statement accompanying the National Defense  Authorization Act for Fiscal Year 2014 included a provision that we review  the effects of the fiscal year 2013 sequestration. Further, the House  Committee on Armed Services requested that we review the  implementation and effects of 2013 sequestration on DOD. This report  examines (1) how DOD, including the military services, allocated fiscal  year 2013 sequestration reductions, (2) what effects, if any, DOD has  identified from the fiscal year 2013 sequestration on selected DOD  programs, services, and military readiness, and (3) the extent to which  DOD took actions to mitigate the effects of the fiscal year 2013  sequestration.
While funding requested as part of DOD’s base budget supports the normal, day-to-day  operations of the department, DOD also receives additional funds, referred to as overseas  contingency operations appropriations, to pay for incremental costs that have resulted  from the war in Afghanistan and other contingency operations. Department of Defense  Financial Management Regulation 7000.14-R, Vol. 12, Ch. 23 (September 2007), defines  incremental costs as costs that would not have been incurred had the contingency  operation not been supported. following sections describe our approach in selecting these case study  areas to address each of our objectives.
subsections: section_title: Case Study Selection
paragraphs: We selected a non-probability sample of five case studies of expenses or  investments within DOD to review in detail. In selecting the case studies,  we sought to encompass a significant share of the $37.2 billion in DOD’s  discretionary resources ordered for sequestration on March 1, 2013, as  well as the programs, projects, and activities with the largest expected  effects from sequestration in terms of factors such as the amount of  sequestration reduction applied and the relationship to military readiness.  Based on these criteria, which are discussed in more detail below, we  selected the following case studies to represent each type of nonexempt  appropriation:  1.  operation and maintenance accounts: service components’  operational tempo and training;  2.  operation and maintenance accounts: service components’  maintenance and weapons system support;  3.  operation and maintenance accounts: service components’ base  4.  RDT&E and procurement accounts: a selection of defense-wide and  military service acquisition programs for weapon systems; and  5.  military construction accounts: defense-wide and services’ major  military construction projects.
Overall, these five case studies accounted for roughly $12.8 billion, or  about 34 percent, of the total sequestration ordered for DOD’s  discretionary budget resources on March 1, 2013, including nearly  $9.3 billion for operation and maintenance reductions, $2.9 billion for  RDT&E and procurement, and $604 million for military construction. The  case study findings provide illustrative examples of sequestration effects  and mitigation strategies across the department. While the findings of the  five case studies cannot be generalized to all DOD programs, projects,  and activities, they reflect a wide range of perspectives across the  department.
We used a multistep process to select the programs, projects, or activities  within each case study for our review. To select the operation and  maintenance case studies, we first grouped the service components’  258 unclassified operation and maintenance account subactivity groups  into 11 broad categories that we identified based on our review of DOD’s  operation and maintenance budget request overview for fiscal years 2013  and 2015, as well as the service components’ budget justification  materials for these years, which describe the activities and functions by  each subactivity group (see table 4).
By categorizing the subactivity groups, we narrowed our case study  options while also ensuring those options would cover multiple, related  subactivity groups and a larger share of the sequestration reductions to  the operation and maintenance accounts. To ensure that the budget  categories and the placement of subactivity groups therein were valid, we  shared our approach with officials from the Office of the Under Secretary  of Defense (Comptroller), who generally agreed with our categorization  and made suggestions that we incorporated as appropriate. After  categorizing the subactivity groups, we selected for our case studies 3 of  the 11 operation and maintenance categories that were subject to large  reductions across service components based on our analysis of DOD’s  budget execution data for the fourth quarter of fiscal year 2013, and  which, according to our review of DOD readiness reports and budget  documents, were most closely linked with military readiness. The other  8 categories were subject to relatively smaller reductions or were less  directly related to readiness. The 3 selected categories—operational  tempo and training, maintenance and weapon systems support, and base  operating support—accounted for about $9.3 billion, or roughly  66 percent, of the nearly $14.0 billion fiscal year 2013 sequestration  reduction to the service components’ operation and maintenance  accounts. Appendix III presents a list of the service components’  unclassified operation and maintenance subactivity groups, grouped  within the 3 categories we selected for our operation and maintenance  case studies.
For the RDT&E and procurement case study, we reviewed data from a  June 2013 DOD report on sequestration reductions applied to weapon  systems or other acquisition programs. We also analyzed 2013 and  2014 budget data and DOD’s 2015 budget documents to identify weapon  systems that reported experiencing the greatest sequestration-related  effects. Based on this analysis, we chose the following 19 weapon  systems managed by the Army, Navy, Air Force, or through a joint  acquisition approach:
Army (5 systems): AH-64E Apache Helicopter, MQ-1C Gray Eagle  Unmanned Aircraft System, Paladin Integrated Management,  Warfighter Information Network--Tactical (WIN-T) Increment 3, OH- 58D/OH-58F Kiowa Warrior Helicopter.
Navy (8 systems): CH-53K King Stallion Helicopter, Littoral Combat  Ship, DDG 1000 Zumwalt Class Destroyer, P-8A Poseidon Multi- Mission Maritime Aircraft, Virginia-Class Submarine, H-1 Helicopter,  E-2D Advanced Hawkeye Aircraft, AIM-9X Block II Sidewinder  Missile.
Air Force (5 systems): KC-46A Tanker Aircraft, F-22 Raptor Aircraft,  Space Based Infrared System High, Global Positioning System III, F- 15 Aircraft.
Joint Program, Air Force and Navy (1 system): F-35 Joint Strike  Fighter Aircraft.
The 19 selected weapon systems accounted for about $2.9 billion of the  approximate $15.8 billion sequestration reduction to DOD’s RDT&E and  procurement accounts.
For the military construction case study, we reviewed budget data  presented in the June 2013 DOD report and identified five military  construction accounts to which sequestration reductions were applied in  fiscal year 2013. These accounts include those for the defense-wide  agencies, the Army National Guard, Army Reserve, Navy, and Navy  Reserve. We then included within the scope of this case study all major  military construction projects funded by those sequestered accounts, as  reported in DOD’s June 2013 report.
section_title: Data Collection and Analysis
paragraphs: To determine how DOD and the military services allocated fiscal year  2013 sequestration reductions, we reviewed data from the June 2013  DOD report to identify reductions applied to the operation and  maintenance, RDT&E, procurement, and military construction accounts,  including how reductions were applied within those accounts to fiscal year  2013 appropriated funds and to prior year unobligated balances still  available from multi-year appropriations.maintenance accounts, we also reviewed data from DOD’s operation and  maintenance budget execution report for the fourth quarter of fiscal year  2013 to identify how reductions were allocated among the service   For the operation and  components’ subactivity groups.maintenance categories that we developed to determine the amount of  reductions applied within each category. Although the sequestrable base  for each of the 11 operation and maintenance case study categories  included both fiscal year 2013 enacted funding and any prior year  unobligated balances, we did not include prior year unobligated balances  in our analysis of sequestration data within those categories because  operation and maintenance funding is generally available for obligation for  one year only, and any unobligated balances within operation and  maintenance accounts are relatively small. We assessed the reliability of  sequestration data from the June 2013 DOD report and the DOD report  on operation and maintenance budget execution by administering  questionnaires and interviewing relevant personnel responsible for  maintaining and overseeing the systems that supplied the data for these  reports. Through these questionnaires and interviews, we obtained  information on the systems’ ability to record, track, and report on these  data, as well as the quality control measures in place. We found the data  on fiscal year 2013 sequestration reductions to be sufficiently reliable for  the purposes of this review.
We also utilized the 11 operation and  To determine what effects, if any, DOD has identified from the fiscal year  2013 sequestration on selected DOD programs and functions and military  readiness, we examined relevant sequestration implementation guidance  issued by DOD and the service components. For each of the three  operation and maintenance case studies, we also reviewed DOD’s fiscal  year 2013 budget execution data, and for each of the five case studies we  reviewed documentation of effects and mitigation strategies. We collected  and reviewed available program-, project-, or activity-level data, other  summaries, or reports that documented and quantified sequestration  effects. These data and information included, for example, changes in  aircraft flying hours and deployment schedules, deferment or cancellation  of training or exercises, delays in the induction of equipment into depots  or deferral of maintenance, project backlogs, contract delays, and  reductions in the number of civilian personnel or contractors available to  perform work, among other things. When examples of increased  spending are discussed in this report, we provided the gross rather than  net changes as reported to us by DOD officials in interviews and related  documentation. In cases where the data on sequestration effects were  provided through interviews with relevant officials, we corroborated them  where possible through other sources, including service documents and  reports. Where possible, we identified differences between planned and  executed activities and interviewed relevant service component and  acquisition program officials about the extent to which these differences  could be tied to the effects of fiscal year 2013 sequestration reductions. In  addition, we reviewed congressional testimonies by senior DOD and  military service officials, briefings, and commanders’ assessments  prepared by the military services that presented evidence of any  sequestration-related effects on the services’ programs and functions and  overall military readiness.
To determine the extent to which DOD took actions to mitigate the effect  of the fiscal year 2013 sequestration, we reviewed information gathered  within each of the five case study areas regarding mitigation efforts  reported by DOD and the services, which included interviews with officials  and other documentation. Further, we gathered documentation and  interviewed DOD and service officials to identify any efforts taken to  gather and apply lessons learned from their experiences implementing  sequestration in fiscal year 2013 in response to a circular that was  revised recently by the Office of Management and Budget.
We also analyzed data on the use of funding flexibilities and military  construction project bid savings to understand how these options were  used to address the effect of sequestration-related reductions.Specifically, we reviewed data on the services’ use of reprogrammings for  fiscal years 2009 through 2014 to determine any trends, as well as  interviewed DOD and service officials to discuss how reprogrammings  were used to address the effects of sequestration in fiscal year 2013. For  these purposes, we limited the scope of our data analysis to transfers and  reprogrammings that require prior approval from congressional   We obtained the data on  committees before they can be implemented.prior approval reprogrammings from reprogramming requests maintained  on the website of the Office of the Under Secretary of Defense  (Comptroller). We also obtained spreadsheets with data on  reprogramming from that office and compared a nongeneralizeable  sample of randomly-selected data points between the two data sources to  assess the reliability of the data.  We found these data to be reliable for  the purposes of reporting on DOD’s reprogramming actions.
For determining sequestration mitigation efforts within the military  construction case study, we also reviewed and analyzed data from the  Military Construction FY 2014 Fourth Quarter Bid Savings and   and the Military Construction FY 2015  Unobligated Balances Update First Quarter Bid Savings and Unobligated Balances Update to assess  changes in the amount of bid savings available to DOD components  between fiscal years 2009 through 2014.with DOD component officials and discussed with them the extent to  which bid savings helped offset sequestration reductions to military  construction projects in fiscal year 2013, as well as the expected effect of  the resulting changes in DOD’s accumulation of bid savings on DOD’s  ability to respond to other current or future needs. In addition, we  interviewed DOD officials responsible for updating and maintaining  systems that track the bid savings data about the systems’ ability to  record, track, and report on these data, and the quality control measures  in place to ensure that the data are reliable for reporting purposes. We  found the bid savings data to be sufficiently reliable to demonstrate trends  in the accumulated amount of bid savings among DOD’s military  construction accounts.
To further our understanding of DOD’s allocation of fiscal year 2013  sequestration reductions and the extent to which those reductions  affected selected case study areas or were mitigated by DOD efforts, we  interviewed officials, or where appropriate, obtained documentation at the  organizations listed below:  Office of the Secretary of Defense
Office of the Under Secretary of Defense (Comptroller)
Office of Cost Assessment and Program Evaluation
Office of the Deputy Chief Management Officer
Manpower and Personnel Directorate
Force Structure, Resources, and Assessment Directorate
F-35 Joint Strike Fighter program  Department of the Air Force
Office of the Assistant Secretary of the Air Force, Financial
Office of the Assistant Secretary of the Air Force, Installations,
Air Force Civil Engineer Center
Headquarters Air Force, Office of the Deputy Chief of Staff, Strategic  Plans and Programs (A8)
Headquarters Air Force, Studies and Analyses, Assessment, and  Lessons Learned (A9)
Headquarters Air Force, Office of the Deputy Chief of Staff,  Operations, Plans and Requirements, Operations (A3O)
Headquarters Air Force, Office of the Deputy Chief of Staff, Logistics,  Installations and Mission Support, Security Forces (A47S)
Headquarters Air Force, Office of the Deputy Chief of Staff, Logistics,  Installations and Mission Support, Logistics (A4L)
Air Combat Command
Air Education and Training Command
Air Force Materiel Command
Air Force Materiel Command, Air Force Life Cycle Management
Air Force Space Command, Space and Missile Systems Center
Air Force Reserve Command
Office of the Assistant Secretary of the Army for Financial  Management and Comptroller, Army Budget
Headquarters, Department of the Army, G-3/5/7 Operations and Plans
Headquarters, Department of the Army, G-4 Office of the Deputy  Chief of Staff for Logistics
Office of the Assistant Chief of Staff for Installation Management
U.S. Army Corps of Engineers
U.S. Army Installation Management Command
U.S. Army Forces Command
U.S. Army Materiel Command
U.S. Army Training and Doctrine Command, U.S. Army Combined  Arms Center, Center for Army Lessons Learned
U.S. Army Aviation and Missile Life Cycle Management Command
U.S. Army Tank-Automotive and Armaments Command Life Cycle
U.S. Army Communications-Electronics Command
Assistant Secretary of the Navy, Financial Management and
Office of the Deputy Chief of Naval Operations (Fleet Readiness and  Logistics), Fleet Readiness Division (N43)
Office of the Deputy Chief of Naval Operations Warfare Systems (N9)
U.S. Fleet Forces Command
Naval Air Systems Command
Naval Sea Systems Command
Naval Supply Systems Command
Space and Naval Warfare Systems Command
Naval Facilities Engineering Command
Commander, Navy Installations Command
Navy Warfare Development Command
Office of the Chief of Navy Reserve
Navy Reserve Forces Command
Headquarters Marine Corps, Programs and Resources
Headquarters Marine Corps, Plans, Policies, and Operations
Headquarters Marine Corps, Installations and Logistics, Logistics
U.S. Marine Corps Forces Command
U.S. Marine Corps Logistics Command
U.S. Marine Corps Installations Command
U.S. Marine Corps Training and Education Command, Marine Corps
U.S. Marine Corps Forces Reserve  We conducted this performance audit from April 2014 to May 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix III: Military Service Components’ Operation and Maintenance Subactivity Groups, Organized by GAO-Identified Budget Categories, Fiscal Year 2013
paragraphs: Table 5 presents a list of the service components’ unclassified operation  and maintenance subactivity groups within the base operating support,  operational tempo and training, and maintenance and weapon systems  support budget categories we selected for our operation and maintenance  case studies. See appendix II for additional details regarding our  selection of case studies and additional information regarding our scope  and methodology.
section_title: Appendix IV: Comments from the Department of Defense
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
paragraphs: Johana R. Ayers, (202) 512-5741 or ayersj@gao.gov; Michael J. Sullivan,  (202) 512-4841 or sullivanm@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Matt Ullengren (Assistant  Director); Bruce Thomas (Assistant Director); Clarine Allen; Natalya  Barden; Melissa Blanco; Bruce Brown; Pat Donahue, Marcus Ferguson;  Dayna Foster; Amber Gray; Jeffrey Harner; Sameena Ismailjee; Amie  Lesser; Jonathan Mulcare; Bonita Oden; Meghan Perez; Carol Petersen;  Steve Pruitt; Daniel Purdy; Kiran Sreepada; Shana Wallace; Erik Wilkins- McKee; and Michael Willems made key contributions to this report.
section_title: Related GAO Products
paragraphs: 2013 Government Shutdown: Three Departments Reported Varying  Degrees of Impacts on Operations, Grants, and Contracts.   GAO-15-86. Washington, D.C.: October 15, 2014.
Sequestration: Comprehensive and Updated Cost Savings Would Better  Inform DOD Decision Makers If Future Civilian Furloughs Occur.  GAO-14-529. Washington, D.C.: June 17, 2014.  2013 Sequestration: Selected Federal Agencies Reduced Some Services  and Investments, While Taking Short-Term Actions to Mitigate Effects.  GAO-14-452. Washington, D.C.: May 28, 2014.  2013 Sequestration: Agencies Reduced Some Services and Investments,  While Taking Certain Actions to Mitigate Effects.   GAO-14-244. Washington, D.C.: March 6, 2014.
Sequestration: Observations on the Department of Defense’s Approach in  Fiscal Year 2013. GAO-14-177R. Washington, D.C.: November 7, 2013.
March 1 Joint Committee Sequestration for Fiscal Year 2013, B-324723  Washington, D.C.: July 31, 2013.
Agency Operations: Agencies Must Continue to Comply with Fiscal Laws  Despite the Possibility of Sequestration. GAO-12-675T. Washington,  D.C.: April 25, 2012.