Defense Department Comptroller Michael McCord said he is not confident Congress will provide the department a budget when lawmakers return after next week’s election, but rather he’s hopeful that the debt ceiling debate in the spring will provide Congress an opportunity to discuss its fiscal priorities and how to achieve them.

McCord, speaking at the TechAmerica Foundation Vision Forecast Conference, said that DoD is currently spending somewhere between what the president has recommended and what the Budget Control Act (BCA) originally called for, but has little idea what the mood of Congress will be for higher levels of funding in fiscal year 2016 or beyond. He said he expects no instant resolution to the long-term funding problems when the new Congress is seated in January, but he added that the debt ceiling debate that will happen sometime in the spring will force a discussion about overall budget priorities. Even if defense specifically is not part of the negotiation, McCord said it will be enlightening to understand whether a majority of lawmakers support the BCA spending caps or if there appears to be room for further talks and negotiations over defense spending levels.

Michael McCord, Defense Department comptroller and chief financial officer
Michael McCord, Defense Department comptroller and chief financial officer

DoD leadership went into this fiscal year understanding what its topline would be, thanks to the December 2013 Bipartisan Budget Act (BBA) that provided two years of partial relief from sequestration. But no one knows what to expect in fiscal year 2016, and that uncertainty creates risk for both the Pentagon and industry, McCord said.

“If you look back over the last couple years, every year since the BCA was signed, we have asked for more money for DoD–or for discretionary for that matter–than strict adherence to the caps has called for. We’ve never gotten everything we’ve asked for, but neither have we ever gotten all the way down to what the caps were,” McCord said. But looking forward, “we’re already carrying more risk given everything we’re asked to do at the budget levels that we have I think than our leadership feels comfortable with. And so we’re very concerned about dropping down below the levels we have asked for to the Budget Control Act levels.”

The difference between the president’s request and the BCA levels over the next five years seems like a lot of money, he said–about $130 billion total–but is only about a 5 percent difference. Many lawmakers and others have asked why the Pentagon can’t spend just a small percentage less over five years, but McCord said that spending reduction would be very destructive after years of budget reductions even before the BCA cuts kicked in.

That pain would be passed along to industry, he said, because the modernization accounts are the only quick way to achieve budget savings.

“There is certainly going to be, I think, some potential volatility in the acquisition side depending on whether we get the higher levels the president has been recommending or whether we get a lower level,” he said.

And the modernization needs only grow over the next several years, making the problem of funding modernization get worse before it gets better if Congress continues to adhere to BCA-level funding caps.

“The next couple years are going to be tight for us–I think actually we’re probably a little more concerned at this point about the five years after the next five years being really harder for us as we in particular face some large bills to modernize the nuclear triad,” McCord said. “If we continue forth with the plans we have on the books now, that’s going to be maybe a more challenging time than the next five years.”