Military Times

Year-end spending: Some units have it down cold

source GAIA package: Sx_MilitaryTimes_M6201210210170312_5675.zip Origin key: Sx_MilitaryTimes_M6201210210170312 imported at Fri Jan 8 18:18:07 2016

When the end of the fiscal year comes around, there's often a mad dash in government offices to use up remaining budget money or risk losing it forever. That's true in many Air Force units as well.

Those units sometimes go on last-minute spending sprees for items such as office supplies, furniture and even artwork.

"Look in any Air Force office and count the number of Herman Miller Aeron chairs that retail for $850 apiece," a retired colonel who did not want to be named told Air Force Times in an email. "They are wonderful chairs and I bought my own when I retired, but I think Air Force posteriors could be comfortably seated for far less."

The money that needs to be spent is often referred to as "fall out money" or "end-of-the-year money," said Todd Harrison, an analyst with the Center for Strategic and Budgetary Assessments think tank in Washington.

"If you do not spend the money by the end of the month, your organization loses it and the money is returned to the U.S. Treasury," Harrison said in an email. "If Congress and higher-ups in the military see that you returned a substantial amount of money unspent, they are likely to question next year's budget submission."

The fear of getting less money from Congress for not spending your entire budget may seem absurd, but it is well-founded. Lawmakers have proposed cutting millions of dollars from programs in the fiscal 2013 defense budget for just that reason.

The House wants to cut Tricare funding by $400 million "on the grounds that the program historically underspends its annual appropriation," according to a recent report by the Congressional Research Service. The Senate wants to go even further, cutting $807.4 million from Tricare due to "historical underexecution."

The possibility of $500 billion in sequestration defense spending cuts next year may only exacerbate the binge spending, Harrison said.

"Program managers have an incentive to obligate as much money as they can before sequestration hits, because any unobligated money in their accounts will be cut," he said. "I have not seen any evidence that this is happening, but the incentive is there if program managers are following how sequestration works."

Looking for wise choices

But those who plan ahead can put end-of-year money to good use.

Retired Col. Henry Hungerbeeler was commander of Joint Base Andrews, Md., in the early 1990s, and he would wait by the phone on the last day of the fiscal year — Sept. 30 — for the major command to call and ask if he could use unobligated money.

"My mentor, I guess you could say, was Brig. Gen. Bobby Mitchell," Hungerbeeler told Air Force Times. "He said, 'Be ready to obligate some money at the last minute because there will be other bases that are unable to do that; the MAJCOM is going to do its best to not lose anything.' "

Rather than using the money for things he really didn't need, Hungerbeeler made sure he always had a major project lined up, such as adding curbs and gutters to roads on base or painting hangars.

"Let's say we knew that we needed $7 million worth of painting, because that tends to accumulate — you never get all that you need," he explained. "So you could write an indefinite-delivery/indefinite-quantity contract that would guarantee a painter, a contractor, say $500,000 worth of work at some time during the next year. You would leave it open — in other words, you'd have an option to increase that contract up to $7 million.

"So then if the MAJCOM called at the last minute and said, 'We've got $2 million from Base X. They can't obligate it. Can you use it?' Then yes, it only took us a few minutes to accomplish that."

Despite such last-minute expenditures, the "burn rate" at which the Air Force spends money has remained fairly constant from fiscal 2008 to 2011, according to the Air Force.

In fiscal 2011 the Air Force spent 24 percent of its yearly obligations in the fourth quarter, compared with 22 percent in the third quarter, according to figures provided by the service. The largest increase in the fourth quarter was in fiscal 2009, when the burn rate rose from 18 percent to 24 percent. The biggest overall jump took place in the second quarter of fiscal 2010, when it rose from 17 percent to 27 percent.

"Fall out money, while significant and sometimes wasteful, is relatively small compared to the overall budget," Harrison said. "Payroll expenses for military and civilian personnel, for example, are about a third of the Air Force budget. That money gets spent on a steady basis throughout the year, which helps keep the overall burn rate relatively constant."

Even in lean years, commanders have been able to count on end-of-year money because some programs were not executed to the levels at which they were planned, said retired Gen. Roger Brady, former commander of U.S. Air Forces in Europe.

"Commanders have prepared for end-of-year money for years, and they prioritize their requirements to take best advantage of the situation," Brady said in an email. "However, the tendency is to pull budget authority back to the Air Staff in lean years. What that means for how efficiently it is spent and whether commanders' needs are met remains to be seen."

Replacing items unnecessarily

The question is, should units continue to burn through money at the end of the fiscal year in an environment of decreased spending? Several people with whom Air Force Times spoke said they believe the money is being wasted.

"I saw office furniture and stuff replaced when it really probably didn't need to be," a retired Air National Guard colonel who did not want to be identified told Air Force Times. "It's like people kept lists of stuff, things they maybe could need but certainly not necessarily. I saw it all the time. Things were just replaced when they were still useful.

"That was common. You were basically told you needed to spend the money."

Another airman who was stationed at Fairchild Air Force Base, Wash., said he consistently ran up against budget overages of between $30,000 and $60,000. He would be told to spend that money on short notice.

Once, he bought a 42-inch plasma TV with full surround sound and a computer hookup for a room that was supposed to be used for commander's calls, said the airman, who did not want to be named.

"It went unused for long stretches of time just sitting there doing nothing with the computer hooked up to it," he said. "There was a different area that was in one of the shops where they had a big room and we usually did commander's calls with a projector and a pull-down screen for it. And I would grab a laptop and hook up to it to put whatever commander's call slide was up there or PowerPoint presentation."

Another time, his unit bought all-terrain vehicles that cost at least $4,000 apiece, but the company that shipped the vehicles did not cover them, so they arrived at the base covered in mud and other filth from the highway, the airman said.

At least one salesman made sure to visit Fairchild at the end of the fiscal year, he said.

"There's a company that comes into the base usually and tries to sell tools and stuff like that and they're usually the main supplier of tools, and a lot of times his visits would kind of coincide with that [and he'd say] 'Hey look at this, we've got carbonite-tipped drill bits and all this other stuff for getting stuck screws out and all this other different stuff,' " the airman said.

The money always went toward niceties, he said. When the airman asked why he needed to do this, considering his unit consistently had money at the end of the year, he was told to "shut up and color," an expression that means "do as you're told."

"To me, it's a huge waste of money, and if you're spending that type of money on niceties, that could be boots on the ground or a rifle in somebody's hand or anything besides stupid stuff that we really don't need," the airman said.

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