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Tuesday, June 18, 2013

Mixed Outlook for DOE

As Lawmakers Prepare to Work on Spending Bill, Mixed Outlook for DOE
Todd Jacobson
Weapons Complex Monitor
June 14, 2013

The funding picture for the Department of Energy and the National Nuclear Security Administration will likely become a lot more clear over the next two weeks as the House and Senate Energy and Water Appropriations subcommittees mark up their versions of the Fiscal Year 2014 Energy and Water Appropriations Act. The House is set to go first, marking up its version of the bill on June 18, while the Senate is scheduled to write its bill the following week, on June 25. The results for DOE and NNSA programs are likely to be very different, DOE Budget Director Christopher Johns said this week, especially as the House E&W Appropriations Subcommittee wrangles with a tight allocation that could mean stiff cuts for some DOE and NNSA programs. “What we anticipate there is that it will be dramatically bad for the Department of Energy in that House mark, just because their funding level is so low,” DOE Budget Director Christopher Johns said at the Energy Facility Contractors Group annual meeting June 12. “It reflects not so much the view of the subcommittee we work with but rather the overall funding level.”

The House subcommittee’s $30.4 billion allocation is $2.9 billion below the panel’s presequester level from a year ago, and $700 million below the post-sequester level. In contrast, the Senate subcommittee’s allocation is believed to be several billion dollars higher, though the exact allocation has not been made public. Overall, there is a $91 billion difference between the top line spending numbers in the House and Senate, with the House setting its top line at $967 billion and the Senate setting its at $1.058 trillion. The Obama Administration requested $7.9 billion in FY 2014 for the NNSA’s weapons program, which was granted an anomaly in the current Continuing Resolution funding the government to spend $7.6 billion, and $1.8 billion for its nonproliferation work.

The higher Senate allocation is likely to offset the lower House allocation, and Johns cautioned contractors not to “overreact” to House funding levels because conference negotiations are likely to assuage the funding cuts. It’s likely, however, that the government is funded by a CR for at least part of FY 2014, Johns said. He also suggested that DOE could end up with an enacted budget level that also layers on sequestration cuts, leaving DOE with approximately $25 billion—about the same as FY 2013. Both scenarios would be difficult to deal with as the cumulative impact of the sequester takes its toll, Johns said. “We were able to sort of limp along in ‘13 using carryover balances, realigning money, this sort of thing,” he said. “A lot of that flexibility we’re sort of losing as we move along. We’ll have less ability to manage to that kind of funding level in ‘14. We’re actually managing to a higher funding level in ‘13 due to the carryover and the reprogrammings, but we can’t do that forever.”

Johns said the impact of the sequester hasn’t been as bad as many believed because the Department was able to defer or delay some projects in the hope that the funding picture could improve in future years. “What we’ve found so far is through realigning dollars and through slower spending earlier in the year there have been definite impacts on contractors and on individual employees but it hasn’t been the dramatic first-year impact that we thought might happen,” he said. While the funding cuts may not be deeper in FY 2014, the impact might be, Johns said. “It’s been a little difficult to articulate where the sky-is-falling kinds of problems are this year but it may not get better next year if the budget position doesn’t improve,” he said.

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