Inside Defense
Nov. 11, 2009 -- The Pentagon is reviewing whether to crack open a pot of money that in recent years has been dedicated largely to the repair and replacement of Army equipment in order to pay maintenance bills and new weapons purchases for the Navy, Air Force and Marine Corps -- a decision that could influence the allocation of tens of billions of dollars, according to Defense Department officials.
Under review is the policy that defines the criteria for what repairs and new equipment can be paid for in the war cost portion of the Pentagon budget, and which so-called reset costs must be funded in the operations and maintenance portions of the annual base budget.
“There is still work ongoing in that regard,” said Alan Estevez, acting deputy under secretary of defense for logistics and material readiness, in a Nov. 5 interview. His office is participating in the policy review, along with the office of cost assessment and program evaluation and the Pentagon's comptroller shop, according to Defense Department sources. Any proposed guidance will also require approval from the White House Office of Management and Budget, sources said.
War cost spending bills have long included substantial sums for the Army to repair and replace equipment worn out and stressed by operations in Iraq and Afghanistan. Now, the other services are looking to have the war cost appropriations pay for costs that under current rules must be financed in the base budget.
Last fall, for instance, the Navy submitted a $4.2 billion bill for the repair and replacement of aircraft it argued were stressed by the wars, according to Pentagon sources. Specifically, the Navy was looking to recover fatigue life lost due to missions flown in contingency operations with procurement funds.
The Navy's request was rebuffed, but its move served as a catalyst for the current review.
“If I am flying a Navy jet off an aircraft carrier in the Arabian Gulf, is that a legitimate OCO expense?”
said Estevez, using the acronym for war cost spending -- overseas contingency operations. “I'd be flying that plane in some regard anyway. If it gets a bird strike over the air in Iraq, is that damage from OCO or is it different from a bird strike that occurs over the gulf during a normal flying patrol?
“What are the rules on that? It gets pretty gray pretty fast,” Estevez said.
The Pentagon's definition of equipment reset is “the actions taken to restore and enhance combat capability to equipment destroyed, damaged, stressed, or worn out beyond economic repair due to combat operations by repairing, rebuilding, or procuring replacement equipment,” Estevez said.
Under current rules, the Defense Department estimates that as of this summer, the total cost to reset all major equipment deployed to both Iraq and Afghanistan is $29 billion, according to a Pentagon source familiar with recent equipment liability estimates. This sum is not necessarily what the Pentagon would seek to repair in a single year, but simply a snapshot at a point in time of the total amount of work required to rectify the U.S. equipment inventory.
Of these costs, the Army's portion is $19 billion, including: $2 billion for new equipment, $5 billion to replace damaged gear, $9 billion for overhauling equipment at U.S. depots and $2 billion for repairs in the field. The Navy and Air Force reset liabilities are calculated to be $3 billion each and the Marine Corps’ $4 billion, according to the Pentagon source. -- Jason Sherman
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