What’s going on at the Pentagon with regards to the automatic spending cuts set to happen in 2013?

Defense Secretary Leon Panetta told reporters [emphasis mine]:

But, very frankly, just the shadow of sequester being out there continually is something that–it basically creates a problem for us as we try to plan for the future. What exactly–what are we going to be facing? How are we going to deal with it?

We need stability. You want a strong national defense for this country? I need to have some stability. And that’s what I’m asking the Congress to do: Give me some stability with regards to the funding of the Defense Department for the future.

Unfortunately, Congress left Washington and won’t be back until after Election Day to work on a deal to avoid the automatic spending cuts portion of the “fiscal cliff.”

While Secretary Panetta frets about needing to “plan for the future,” a top DoD official ordered the Pentagon not to plan for the cuts. Earlier this week, the number two at Defense, Deputy Secretary Ashton Carter, sent a memo to managers and military commanders ordering them to “continue the defense mission under current laws and policies, without taking any steps that assume sequestration will occur” [emphasis mine]. He went on to write, “Commanders and managers should not alarm our employees and their families by announcing personnel actions related to sequestration or by suggesting that these actions are likely.”

There’s no planning and no guidance from the Pentagon. It’s pretending that nothing will happen. It’s like steering a ship on its current course even when a Cat-5 hurricane is bearing down because it's likely it'll go in a different direction.

In the meantime, civilian employees, defense contractors, and suppliers (many small- and medium-size businesses) wonder what will happen. This is unnecessary uncertainty.

We need to avoid these simplistic cuts because, as Heritage Foundation defense analyst Brian Slattery points out, they could end up costing taxpayers more in the long run:

Many of these programs are already underway. The managers of these will find it quite difficult to administer a 9.4 percent cut when they have already spent significant time creating plans under previous assumptions. Long-term acquisition, operation, and maintenance programs often rely on long-lead purchases, which take advantage of locked-in prices and economies of scale. Aside from breached contract fees, program managers will also have to reevaluate how much they can afford immediately versus long-term planning, which may cause cost growth in the future.

The U.S. Navy fleet demonstrates the need for steady and predictable budgeting. Aircraft carriers, for example, take roughly five years to construct. Sequestration will potentially lengthen this build rate by a year, causing uncertainty for the shipbuilders and the companies that supply them.

The dilemma facing the suppliers particularly threatens national security forces for two reasons. First, many suppliers are extremely specialized, and in some cases are the sole provider of a product or service that goes into building a warship. Second, supplier companies are often small businesses. If their only customer is the U.S. Navy, and business is uncertain, they may have to exit the market. These are specialized capabilities and processes that sustain America’s naval superiority in the world.

If the armed services lose such capabilities, what are the costs to find and secure contracts with a replacement? Will the loss of one supplier stall other components of their development? For how long will the military have to go without a certain capability necessary to executing its missions? These are all significant concerns facing acquisition officials, who currently do not know how the across-the-board cuts will be administered.

The administration should be transparent and lay out a plan of what will happen should the cuts go into effect. Also, this should be an impetus for Congress and the administration to find a way to avoid the impending meat ax of spending cuts (and automatic tax increases) that are about to wallop the economy.