Army Continues Prudent Budget Constraints in 2006, Prepares for 2007

US Army, Faced with the high costs of war, the Army currently plans to continue most of the spending restrictions it imposed prior to the Fiscal Year 2006 supplemental, which passed three weeks ago. These budget constraints will remain in place through the rest of this fiscal year, ending Sept. 30, and into Fiscal Year 2007. Certain policies will be reviewed for possible modification, including civilian hiring and contracting limits, both of which were originally intended to be temporary means to preserve solvency in FY 2006. 
 
To conserve funding while awaiting passage of the main FY 2006 emergency supplemental appropriation, the Army significantly scaled back spending from its operations and maintenance account. Among the constraints implemented were: 
 
— Limiting supply purchases to critical wartime needs only 
— Cancellation and/or postponement of all non-mission-essential travel 
— Stopping shipment of goods, unless necessary to support deployed units or those preparing to deploy 
— A hiring freeze on new civilians, except for new interns and lateral moves/promotions of current employees 
— Releasing temporary employees (who will not be hired back even with receipt of supplemental funding) 
— A freeze on all new contract awards and all new task orders on existing contracts 
— Restrictions on the use of government credit cards 
 
The Army also began and continues to plan for the release of selected service-contract employees. 
 
The Army chose to retain these constraints for two purposes: to ensure closing Fiscal Year 2006 without an Anti-Deficiency Act violation and to prepare for anticipated cuts to the Fiscal Year 2007 base budget now on Capitol Hill. 
 
Through these measures, the Army has achieved an overall downward trend in spending — largely resulting from cost avoidance. Travel and transportation monthly obligations are down 10 percent; contract obligations fell by 11 percent; supply obligations are lower by 8 percent; and government credit-card use is down 5 percent. Civilian employee end strength has remained constant. 
 
With Fiscal Year 2007 less than 80 days away, the Army continues its war-fighting mission and other activities at a vigorous pace. Providing relevant and ready land power to the long war remains the primary objective. Concurrently, the Army is moving forward with the formation of a campaign-quality modular force; modernization of its weapon, intelligence and communications systems; rebalancing of the active and reserve components; and implementation of base closure and realignment, and global positioning initiatives. 
 
This extraordinary density of activities and complexity of demands require the direct attention of three- and four-star commanders to ensure greater visibility over traditional controls and policies. Both also require fundamental change in the way that the Army conducts business. The Army must streamline or eliminate redundancies to free financial and human resources that can then be redirected to its core war-fighting mission. 
 
The Army therefore is striving to: 
 
— Improve the processes for repairing equipment and resetting the force 
— Reengineer manufacturing and administrative processes 
— Outsource where it makes sense 
— Make the best use of economies of scale in all contracted services 
— Apply information technology in order to improve support activities and eliminate functions where possible 
— Achieve cost savings in software and hardware while pursuing enterprise-level solutions for networking practices 
 
These steps will increase stability and help senior leaders to focus on current fiscal reality. They also will help to set the conditions needed to proceed with Lean Six Sigma and other key business reengineering techniques.