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Army fights cash crunch, cuts spending.

The Army has frozen all new contract awards and task orders that are not related to war-fighting, as it struggles to cope with the escalating cost of the conflicts in Iraq and Afghanistan.

Spending restrictions were originally imposed while the Defense Department waited for Congress to pass an emergency supplemental appropriations bill. But in an announcement July 19, the Army said the restrictions will continue in force into the new fiscal year that begins in October.

Among other belt-tightening orders:

* Limiting supply purchases to critical wartime needs only;

* a freeze on all non-mission-essential travel;

* stopping shipment of goods, unless necessary to support deployed units or those preparing to deploy;

* a hiring freeze on civilian employees;

* laying off temporary employees; and

* restrictions on the use of government credit cards.

"The Army also began and continues to plan for the release of selected service-contract employees," the statement said.

The cuts are hitting services at domestic Army installations, the Christian Science Monitor reported. Fort Carson, CO, has closed two dining halls. Fort Sam Houston in San Antonio hasn't paid its utility bill since March. Fort Leonard Wood, MO, has money for its payroll and utilities, and nothing else, the paper reported.

In addition to the cost of keeping troops in the field, Army Chief of Staff Gen. Peter Schoomaker has warned of the growing price tag for repairing and replacing tanks, helicopters, trucks and other equipment that has been damaged, destroyed or simply worn out in the war zones.

The Army's 2006 budget is $98 billion. President Bush has requested $111 billion for 2007, but the Army statement said it anticipates Congress may cut that.

Three- and four-star commanders were directed to exercise greater control over spending. "The Army must streamline or eliminate redundancies to free financial and human resources that can then be redirected to its core war-fighting mission," the statement said.

The Army said it has already reduced monthly contract obligations by 11% and reduced supply obligations by 8%, but it provided no estimate of how much money it hopes to save overall.
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Title Annotation:Business Issues; rules on defense contracts
Publication:Set-Aside Alert
Geographic Code:1USA
Date:Jul 28, 2006
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