The Project On Government Oversight offers an analysis of President Obama's Fiscal Year (FY) 2014 budget, which was just released and is now available here. The budget is a blueprint for the initiatives the President would fund if he was unconstrained by Congress. Congress may use the budget as a starting point for appropriations, but also has the capacity to ignore Obama's suggestions and will likely change some of the levels of funding if it passes appropriations bills for FY 2014.
Sequestration is also introducing considerable uncertainty into this year’s budget process. The Continuing Resolution passed last month did not adhere to the budgetary caps of sequestration, as laid out in the Budget Control Act of 2011, and neither has the President’s FY 2014 budget request. Ignoring the reality of sequestration makes the budget somewhat meaningless, as many of these numbers will drop considerably unless Congress and the President pass legislation to undo sequestration. For example, the Department of Defense’s actual FY 2014 budget will be more than $52 billion below the President’s request if sequestration isn’t altered. POGO has extensively outlined areas for finding savings in the Pentagon budget in our Spending Even Less, Spending Even Smarter recommendations, jointly released with Taxpayers for Common Sense. We have giant bull’s eyes on several nuclear weapons-related programs such as a massive new Energy Department project at Los Alamos National Laboratory, and some troubled weapons programs such as the F-35 Joint Strike Fighter and the Littoral Combat Ship.
We’ll also be looking for signs of a reduction in spending on service contractors. In our Bad Business report released in 2011, we estimated that for 35 comparable job occupations examined, service contractors cost taxpayers on average nearly twice as much as in-house government workers (for a discussion of data and analytical limitations in our report, go here).
Finally, we think it’s vital that President Obama invest in federal spending transparency and in the nation’s watchdogs: the Office of Special Counsel, the Government Accountability Office, and the Offices of Inspectors General—an analysis of these budget requests on these watchdogs will come later this week.
Chemistry and Metallurgy Research Replacement Nuclear Facility
By the numbers: FY2012: $200 million | FY2013 (Request): $35 million | FY2014: $0
Analysis: After over a decade of major cost overruns and schedule delays, the National Nuclear Security Administration (NNSA) finally zeroed out funding for this wasteful plutonium facility in last year’s budget request. As proposed, the NNSA will delay construction on the Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF) for at least five years, at a savings of $1.8 billion. And, luckily, the nearly $6 billion facility hasn’t found its way back into the latest budget request.
Office of Special Counsel
By the numbers: FY 2012 (actual): $19 million | FY 2013 (CR): $20 million | FY 2014 (est.): $21 million
Analysis: Government whistleblowers play a vital role in protecting the American public and rooting out waste, fraud, and abuse. Now more than ever, those whistleblowers must be protected and given safe channels for exposing misconduct. The administration has requested $21 million in FY 2014 for the Office of Special Counsel (OSC), the independent federal agency tasked with protecting federal whistleblowers. This is a modest $1 million increase over last year’s budget.
POGO and its allies have urged Congress to increase OSC’s funding. This is all the more important since the recent passage of the Whistleblower Protection Enhancement Act, which will likely expand the agency’s workload. Even with its limited existing resources, OSC has performed remarkably well, resolving a record-high number of matters in 2012. As we noted in our letter, investing in OSC will produce numerous benefits for the federal government and the American public.
Government Accountability Office
By the numbers: FY 2012 (actual): $511 million | FY 2013 (CR): $514 million | FY 2014 (est.): $524 million
Analysis: Few agencies produce a better return on investment for the American taxpayer than the Government Accountability Office (GAO). In the past fiscal year alone, the GAO’s work yielded $55.8 billion in financial benefits—a return of $105 for every dollar invested, according to recent testimony by the Comptroller General. “Since 2002, GAO’s work has resulted in over ½ trillion dollars in financial benefits and over 14 thousand other benefits for the American people,” he said.
Meanwhile, the GAO is facing its lowest staffing level since 1935, with a dramatic drop over the past few years (see above graph).
“This significant reduction in our staffing level severely jeopardizes our ability to adequately support the Congress in a timely manner, now and into the future,” the Comptroller General testified. The administration has asked for $524 million for the GAO in FY 2014—a modest increase that would still leave the GAO with a smaller budget than it had a few years ago.
Moving USASpending.gov to Treasury
Analysis: USASpending.gov is the often error-ridden online portal for government spending data. Improvements to USASpending.gov are much-needed; the integration of data resources that was recommended by the Government Accountability and Transparency (GAT) Board could be a step in the right direction. We hope that moving the responsibility for operating and expanding USASpending.gov to Treasury will achieve the desired effect. This could be a great match, as one of the problems with USASpending.gov is difficulty with tracking funds and Treasury is currently spearheading efforts to create a standardized format for submitting payment requests. Last year, POGO supported the Digital Accountability and Transparency (DATA) Act, especially the stronger reforms for federal spending transparency and accountability in the House version.
The relevant text from the budget:
The Budget capitalizes on Treasury’s extensive financial expertise by having the Department assume responsibility for operating and expanding USASpending.gov. Treasury will increase the transparency of Government-wide programs by improving the publicly-accessible database that communicates financial information to the public and agencies. This program transfer from the General Services Administration is consistent with recommendations from the Government Accountability and Transparency Board to transition assets built by the Recovery Accountability and Transparency Board into the Federal Government's overall financial management framework.
Joint Strike Fighter
The Joint Strike Fighter, or F-35, is the most expensive weapon program ever, with the total cost of the program expected to exceed $1.5 trillion.
The program was recently criticized by both the Government Accountability Office (GAO) and the DoD’s own testing office. The (GAO) recently reported that the programs expected costs increased by $101 million during the past year, largely due to increases in development and construction costs. The Director of Operational Test & Evaluation at the Pentagon recently found a number of deficiencies with the F-35, including problems with the radar, pilot’s helmet, and the training program.
Despite these recent events and the F-35’s history of cost-overruns and under-performance, the President’s budget “includes $8.4 billion to continue the F-35 Lightning II (Joint Strike Fighter) aircraft program, which is designed to counter threats posed by a sophisticated adversary.”
Littoral Combat Ship
By the numbers: FY2012: $2.118 billion | FY2013 Request: $2.339 billion | FY 2014 Request $2.3895 billion
Analysis: Despite a plethora of problems, including the Lockheed Martin variant’s hull cracking and equipment failures that POGO first reported, the President’s budget requests $2.3895 billion for the Littoral Combat Ship (LCS) program, which “Funds construction of four LCS seaframes and procurement of mission modules.”
The Pentagon’s Director of Operational Test & Evaluation has reported that the “LCS is not expected to be survivable in a hostile combat environment,” and, travelling to its first deployment this year, the first LCS has repeatedly lost power at sea.
There’s also evidence that having two distinct variants of the ship will lead to higher costs. Had the President eliminated one variant of this ship (as POGO/TCS recommended), and procured only two ships of that one variant this year (instead of two of each of the two variants), taxpayers could have saved nearly $1 billion dollars in FY2014.
M-1 Abrams Tank
By the numbers: FY2012: $583.9 million | FY2013 Request: $300.8 million | FY2014 Request: $279.4 million
According to the DoD, “The M1A2 Abrams provides mobile and protected firepower for battlefield superiority against heavy armor forces.” But, the Army hasn’t had to battle heavy armor forces in decades and the tanks already available are more than sufficient to engage in any such conflict in the future, as Army officials testified to Congress.
The President’s budget explains that the $279.4 million recommended for the Abrams “Supports modifications and upgrades needed to maintain the armor facility at a sustainable level and minimize loss of skilled labor.”
By the numbers: FY2012: $691.6 million | FY2013 Request: $781.7 million | FY 2014 Request: $1.68 Billion
The FY 2014 President’s budget, “Funds second year of construction for USS John F. Kennedy (CVN 79), completion costs for USS Gerald R. Ford (CVN 78) and continued development of ship systems.”
POGO/TCS recommended reducing the carrier fleet from 11 to 10 ships by decommissioning the USS George Washington in 2016, and not replacing it with a new Ford class supercarrier, such as the USS John F. Kennedy. This plan would still leave the Navy with as many carriers as the rest of the world, combined.
And, as the CBO has noted, “Recent experience suggests that the Navy mobilizes 5 to 7 carriers to fight a major war, and the 10 carriers remaining in the fleet under this option would still provide a force of at least 5 or 6 carriers within 90 days to fight such a war.”
Hardrock Mining Reform
By the numbers: $80 million profit to the Treasury over ten years
Analysis: The government makes billions of dollars every year through the collection of royalties from companies that mine minerals such as oil, gas, and coal on public lands. However, under the General Mining Law of 1872, companies that mine “hardrock” minerals (such as gold, silver, and uranium) on public lands do not pay royalties to the government. In its FY 2014 budget request, the Department of the Interior is seeking to update this nearly 150 year old law and introduce legislation “to provide a fair return to the taxpayer” on hardrock mineral production on public lands. The legislation would only cover new mining claims, but at a projected profit of $80 million over ten years, this plan strikes us as an exciting step in the right direction.
Analysis: The Budget reflects a mixed bag for Inspectors General (IG). While many agency requests for Office of Inspector General (OIG) funding reflect stable budgets or mark a return to higher FY2012 allocations, we found some notable changes in our survey. On the positive side, the General Services Administration (GSA) request allocates $4 million in additional funding for its OIG and sets aside $2,500 for “awards to employees of other Federal agencies and private citizens in recognition of efforts and initiatives resulting in enhanced Office of Inspector General effectiveness.” The request from the Board of Governors at the Federal Reserve also increases the OIG budget, from $16 million in FY2013 to $26 million in FY2014. The Small Business Association request allocates $3 million of additional funding to its OIG. Funding requests for the OIG at the EPA, on the other hand, is $10 million below FY2012 levels.
Looking at the agencies without a permanent Inspector General that we have been tracking (of which there are eight), we found a disturbing trend. Several of these agencies have allocated significantly less funding for these critically important investigative bodies: The Department of Defense funding request for its OIG dropped by $54 million from the FY2013 budget. The Department of State OIG funding request also dropped, with a $7 million decrease from FY2013. The National Endowment for the Humanities has a budget for its OIG so low that it isn’t even its own line item. As we’ve reflected previously, investing in watchdogs like the Inspectors General pays dividends to taxpayers. We are concerned about this shift.
There are other IG developments in the President’s Budget. Funding for the Special Inspector General for Afghanistan Reconstruction moves from part of the Department of State OIG budget to its own budget item, rendering it dependent upon designation by the Congress for Overseas Contingency Operations/Global War on Terrorism (It also increased from $44 million in FY2013 to $50 million in FY2014, while the Special Inspector General for Iraq Reconstruction has been terminated). Stay tuned for more updates on the IGs.
By the numbers: FY2012: $2.777 billion | FY2013 Request: $1.939 billion | FY 2014 Request: $1.866
Analysis: According to the Pentagon, the $1.866 budgeted for the Osprey, “Supports procurement of 18 MV-22 aircraft for the Navy/Marine Corps and 3 CV-22 aircraft for Air Force-SOCOM. The request is based on the second year of a follow-on 5-year multiyear procurement contract, for FYs 2013 to 2017.”
POGO/TCS had recommended the DoD not enter into this multi-year procurement contract, because the Osprey is simply neither cost-effective nor as operationally effective as it is required to be. According to the latest Government Accountability Office (GAO) figures, the procurement costs of the V-22 program have increased by more than $17 billion (42%) from the first full estimates. The mission capable rate for the Osprey has been as low as 54.3% according to the Congressional Research Service. In other words, the Osprey simply wasn’t available to complete nearly half of its missions.
If the President and Congress opt to end procurement of this overpriced, underperforming weapon in favor of cheaper alternatives, billions of taxpayer dollars could be saved over the next ten years.
Uranium Processing Facility
By the numbers: FY2012: $160 million | FY2013 (CR): $340 million | FY2014 Request: $326 million
Analysis: In FY 2013, the National Nuclear Security Administration (NNSA) more than doubled funding for the Uranium Processing Facility (UPF), a $6.5 billion project that’s been plagued by management problems and rampant cost increases for years. Among these issues is the recent discovery that the proposed facility would not be able to safely house the equipment for its mission—a flaw that would add $539 million to the cost and delay the project by an additional 13 months. With the NNSA increasing its weapons budget by nine percent from FY 2013 to FY 2014, the agency’s indicated that the facility can expect another funding increase. Unfortunately, we don’t know yet exactly how much money the NNSA plans to waste on the uranium facility. As we’ve noted in the past, alternatives exist for UPF, and it’s time for the NNSA to seriously consider less costly options.
Update: The NNSA's budget justification shows a slight funding decrease in FY 2014 for UPF, but it also says that the project's overall cost may increase yet again, surpassing its current $6.5 billion price tag. However, "consistent with NNSA's increased emphasis on project management rigor," the agency won't know exactly how much the project cost will increase until the facility's design is further along. The budget acknowledges that the project's delays are partially due to the "Building Space/Fit issues" we mentioned in our original analysis--that is, the facility doesn't fit the very equipment it's being built to house, which resulted in design costs more than doubling from FY 2012 to FY 2013. These cost and management issues are nothing new: a 2010-2011 review of the facility's contractors found “an unacceptable level of cost and schedule risk” associated with UPF. However, back in 2007, the NNSA said it could upgrade existing facilities to accomodate UPF's mission at a fraction of the cost. Given this less costly option, moving forward with a ballooning UPF is completely unjustifiable.
Mixed Oxide Fuel Fabrication Facility
By the numbers: FY2012: $435 million | FY2013 (CR): $438 million | FY2014 Request: $320 million
Analysis: The President’s new budget calls for construction to slow down at the Mixed Oxide Fuel Fabrication (MOX) Facility, giving DOE time to assess less costly, alternative options—and for good reason. The MOX facility was designed to convert weapons-grade plutonium into fuel for use in nuclear energy reactors, but not a single customer has been lined up to buy its product. What’s more, the project is a decade behind schedule and billions of dollars over budget. And, prior to the release of the budget, we heard about a plan to spend another $1 billion on the project—just to finish the roof. While we’re glad DOE has recognized that its current plan “may be unaffordable […] due to cost growth and fiscal pressure,” as the FY 2014 budget request says, we need to see more specifics.
Update: The recently released budget justification from the National Nuclear Security Administration (NNSA) has given us more details about the funding decrease at the MOX facility. The NNSA is requesting $320 million for FY 2014, a 27 percent decrease from FY 2013. The budget justification says:
Cost growth and fiscal pressure may make the project unaffordable, so the Administration is conducting an assessment of alternative plutonium disposition strategies and identifying options for FY 2014 and the outyears. As a result, NNSA will slow down the MOX project and other activities associated with the current plutonium disposition strategy during the assessment period.
The estimated cost of the project recently increased from $4.8 billion to $7.7 billion, according to the NNSA, which attributes this increase to the fact that the project contractors estimated the MOX facility cost before they finished designing it. The project also experienced high personnel turnover, leading the contractor to hire workers "without the requisite nuclear experience," the budget says. Overpriced, understaffed, and unwanted: the MOX facility's got to go for good.
B61 Life Extension Program
By the numbers: FY2012: $126 million | FY2013 (CR): $369 million | FY2014 Request: $537 million
Analysis: When a project’s cost balloons from $4 billion to $10 billion in less than two years, it’s time to take a serious look at it. Unfortunately, the President’s budget request for FY 2014 indicates that the National Nuclear Security Administration (NNSA) is going to continue pouring money into a life extension program (LEP) to update B61 bombs, including about 200 bombs sitting on bases in Europe that lost their strategic importance with the end of the Cold War. We’ll soon know exactly how much more money is being wasted on these bombs.
Update: The budget for the B61 LEP is set to increase by over 45 percent from $369 million in FY 2013 to $537 million in FY 2014, according to the NNSA's budget justification. The funding increase “reflects the continued ramp-up” of engineering and testing, according to the budget. Astoundingly, the baseline for the bomb design is yet to be determined, and is not expected until FY2015. As we mentioned in our earlier analysis, the B61 represents an outdated, Cold War nuclear strategy, and given the magnitude of U.S. fiscal concerns, continuing to spend billions of dollars on weapons of questionable military efficacy and security is not justifiable.