Defense officials are shaking their heads in disbelief as congressional leaders continue to delay passing a wartime defense appropriations bill for fiscal year 2011, which began last October.

With the military spending bill now more than five months overdue, lawmakers Wednesday passed a new stopgap “continuing resolution,” this “CR” to last two weeks, so Defense and other federal departments can continue at least to spend at last year’s budget level.

But the CR doesn’t account for inflation on so many things the military buys including medical care, fuel and supplies, as well as thousands of service and manufacturing contracts. This has left the services scrambling to close funding gaps in critical accounts, including for personnel and health care, by moving money from elsewhere in their budgets.

The result is billions of defense contracting dollars wasted and force readiness falling, Defense officials warned this week in testimony before the Senate and House defense appropriation subcommittees.

“We’ve been holding our breath so long that we are starting to turn blue,” Under Secretary of Defense Robert F. Hale, the comptroller and chief financial officer, bluntly told senators.

Hale and Deputy Defense Secretary William J. Lynn III described how budget delays have raised defense costs by creating enormous inefficiencies. These threaten to offset the effect of efficiency initiatives Defense Secretary Robert Gates and a task force painstakingly identified over the last year.

“This undercuts that greatly,” Lynn said.

Under a CR, the services can’t get full funding of “must-pay” bills such as for pay raises and health care. Monies then must be moved from other accounts, affecting readiness and modernization goals.

The services so far have suspended 75 construction projects. Army and Marine Corps have imposed temporary civilian hiring freezes. Navy cut the length of advance notice given sailors and families to prepare for change-of-station moves, from six months to two. It also delayed contracting for a second Virginia-class submarine this year and delayed buying equipment for a DDG-51 destroyer. Army has deferred the purchase of Chinook helicopters, the refurbishing of war-torn Humvees and has issued a temporary stop-work order on its Stryker Mobile Gun System.

“These are costly actions that we will want to reverse,” Hale said, but that will not be done “at the same price.”

Sen. Daniel K. Inouye (D-Hawaii), defense subcommittee chairman, acknowledged the myriad of problems that a divided Congress has created.

“The readiness of our forces is beginning to be threatened as flying hours and streaming days are reduced, exercises and training events are canceled, equipment is foregoing much needed maintenance,” he said.

Republicans and Democrats continued to play politics with the defense money bill even after the new Congress convened. The House passed its 2011 defense appropriations bill but tied it to controversial deficit-reduction CR. Senate Democrats rejected it, saying that the CR language would decimate many domestic programs on which a recovering economy relies.

Inouye expects that another short CR might have to be passed when the two-week CR expires in mid-March. By April, lawmakers hope to be able to pass a CR that would last through Sept. 30, but with a full 2011 defense appropriations bill attached.

Gates and Adm. Mike Mullen, chairman of the Joint Chief, led the chorus of defense officials this week in warning of more dire consequences if a CR is allowed to freeze defense spending through all of 2011. In effect, that would cut $23 billion arbitrarily from the defense budget request that President Obama submitted back in February 2010.

But the most urgent unfinished business, Gates told the House subcommittee, is inaction on a $1.2 billion reprogramming request for troops fighting in Afghanistan. The money would buy fixed-base sensors to enhance intelligence and reconnaissance capabilities, which Army Gen. David Petraeus, allied forces commander in Afghanistan, says are needed immediately “to better protect our forward-operating bases,” Gates said.

“As of last week, all congressional committees except this one approved the request," Gates said. He pointedly warned the panel not to jeopardize troops “to protect specific programs or contractors.”

Mullen complained that leaving the department under a CR for all of fiscal 2011 “would deprive us of the flexibility we need to support our troops and their families.” Some programs “may take years to recover,” he said.

Operating under a CR since October already “has caused regrettable complications,” Lynn told senators. A year-long CR would impact fighting forces even more directly “and their readiness to defend the nation.”

Hale predicted “brutal reprogramming actions” to move up to $2.5 billion into personnel accounts to ensure everyone gets paid. Another $1.3 billion would have to be shifted to close a money gap for military health care.

Expect “horrible management consequences…many too difficult to notice from here in Washington,” Lynn said. Program managers will delay contracts, and then “hastily make up for that by contracting too quickly without appropriate safeguards.” Others “will resort to short-term contracts that add expense for the taxpayer and instability for the industrial base.”

If the CR remains in effect, Air Force predicts a 10 percent cut in flying hours and lowering the buy of Reaper unmanned aircraft to 24 this year from the 36 planned. Navy would cut flight hours, ship steaming days and training exercises. All services would defer maintenance of equipment. Army would have to cut depot maintenance by $200 million, lowering readiness rates for Blackhawk and Kiowa helicopters. Navy would cancel maintenance availability periods for as many as 29 surface ships.

“The good news,” Hale said, “is that the troops are paying attention to their jobs and letting us worry about this, which is what they should do.”

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