The four military service chiefs presented a gloomy picture of the projected effects of sequestration and a continuing resolution on their respective branches to Senators at an Armed Services Committee hearing on November 7th. While the House of Representatives  has already passed both a defense appropriations bill and a defense authorization bill for fiscal year 2014, the Senate has done neither – even as the 1st quarter of fiscal year 2014 draws to a close. If the Congress fails to enact a regular defense appropriation for fiscal year 2014 prior to January 25, 2014 (i.e. the expiration of the current continuing resolution or “CR”), defense spending will likely be locked at fiscal year 2013 levels under a continuing resolution in effect through October 1st. Moreover, if Congress fails to provide some legislative relief from the implementation of sequestration in this fiscal year, the defense budget will be further slashed – by as much as $54 billion – below that CR level.

General Mark Welsh, Chief of Staff of the Air Force, summed up the collective sentiment of the witnesses: “[w]e don’t know how much money we’re going to have. We don’t know when we will know how much money we’re going to have. And we don’t know what the rules are going to be when we know.”

Of the four testifying, General Ray Odierno, Chief of Staff of the Army, presented arguably the starkest case. General Odierno outlined the dramatic cuts to end strength in store for the Army if sequestration cuts are fully implemented. According to General Odierno, the Army will go from a wartime high of 570,000 soldiers to 420,000 soldiers (an 18% cut) by the end of sequestration in FY’ 21. Moreover, training opportunities for the Army’s current units will be slashed dramatically in FY’14. General Odierno warned that 85% of the Army’s active and reserve Brigade Combat Teams will not meet the readiness (training) requirements for deployment in a contingency because of a lack of funds. And as the service that bore the brunt of the war in Afghanistan over the last 12 years, the Army has the largest backlog of equipment that requires  significant maintenance. General Odierno noted that the Army has deferred some $716 million in maintenance on roughly 172 aircraft, 700 vehicles, 2,000 weapons and 10,000 pieces of communications equipment. Because of the uncertainty over the size and composition of the Army going forward and because of the tremendous deficits in training and maintenance, General Odierno predicted cuts and restructuring to major Army acquisition programs. In particular, General Odierno singled out two high profile programs – the Armed Aerial Scout program and the Ground Combat Vehicle – as being at risk. General Odierno’s testimony to the Senate Armed Services Committee about the threats to Army acquisition programs has closely echoed his previous comments to the defense industry at the annual Association of the U.S. Army Exposition in October.

All of the service chiefs agreed that sequestration needed to be replaced. Barring a full replacement of the sequester cuts, all of the chiefs agreed that greater flexibility in reallocating (“reprogramming”) precious defense dollars would help ease some of the strain. Some members of Congress have discussed temporary relief from the sequester in FY’14 and ’15. If the services got additional funds and flexibility in FY’14, the service chiefs would most likely apply it to their Operations and Maintenance accounts to preserve current readiness. This could be good news for government contractors that provide training support and do maintenance, repair and overhaul of equipment. The first signs of any sort of sequester relief deal would likely come from the House-Senate Budget Committee Conference.

The conference report is due on December 13th, and MLA defense professionals will closely monitor it for any changes.