Here's what Defense Secretary Robert Gates is up against in trying to overhaul the defense bureaucracy: A half-trillion dollar beast that doesn't know how many people it employs, doesn't require cost estimates for new initiatives, buckles under the number of reports and commissions advising it, and allows its workers to retire with benefits and cheap health care after 20 years of service. Yet Gates rolled out a new round of reform proposals earlier this month, threatening to defy defense contractors, veterans groups and workers scattered across the country, many with their patrons in the Pentagon and Congress.
Most Defense secretaries talk about overhauling the Pentagon bureaucracy. Gates, a holdover from the Bush administration, is well-regarded in Washington and has even had some success in the last year in cutting or delaying pricey weapons programs. Though President Obama has called for a three-year freeze on the spending that Congress controls, he exempted the Department of Defense. Nonetheless, Gates realizes that the rapid post-9/11 growth of the military can't go on forever. Congress is threatening to cut this year's defense budget by as much as $14 billion. Gates recently told his department to find $100 billion in savings over the next five years, and on Aug. 9 rolled out plans to cut back on contractors, flatten the bureaucracy by freezing some promotions and dismantle offices, such as the Joint Forces Command, that have unclear mandates or that overlap with other operations. But Gates may have made his job harder by telegraphing his departure from the job in 2011 in a recent interview, essentially rendering himself a lame duck.
Rearranging the Pieces
Some deficit hawks eye the $531 billion annual Pentagon budget as primed for cuts and praise Gates for talking tough, but they overlook a crucial fact: Gates is not trying to cut the overall defense budget. He wants to rearrange the pieces and cut the waste in order to keep the Defense Department growing on pace with the economy. "Let me be clear: The task before us is not to reduce the department's topline budget," he said in a briefing earlier this month. "Rather it is significantly to reduce its excess overhead costs and apply the savings to force structure and modernization."
Even if all his ideas are enacted, some say they don't add up to significant savings and leave the costliest, and most sacred, programs untouched. "We are happy that somebody's going to take steps to end [wasteful programs], but the idea that you can count on those types of reforms saving hundreds of billions of dollars is specious," said Laura Peterson, a senior policy analyst at Taxpayers for Common Sense.
Despite immediate opposition from Congress to such plans as closing the Joint Forces Command, which spends $240 million per year to coordinate training and supplies across the armed services, Gates claims to have the Pentagon on his side. "The thing that has been the most surprising has been the buy-in of the senior military and civilian leadership of the department in what we're trying to do," he told Foreign Policy magazine, "and their willingness to look very hard at a lot of sacred cows and to think differently about the way we do business." In the same interview, he said he expects to retire before January 2012, to give his successor time to settle in before the presidential election.
Details Still to Come
Good-government types point out that details for his plans are so far lacking, and government contractors say that those details will show whether the plans will be effective. " It doesn’t mean you just go slash like a salami slicer," Stan Soloway, president and CEO of the Professional Services Council, which represents more than 300 contracting firms, said of the proposal to reduce service sector contracts by 10 percent in each of the next three years. While the department can't pinpoint the number of contractors it employs, its estimate of 766,000 exceeds the size of its civilian workforce.
Soloway points out that results of so-called insourcing plans have been mixed and that the government will have to employ contractors for jobs that require high-level training and technology. Gates acknowledged as much when he said that "critical areas" like acquisitions jobs would be exempted from the requirement.
And many Pentagon-watchers say it has plenty of cost problems just among its regular employees. Close to 340,000 active-duty personnel do everyday jobs like clerical and retail work; 40 percent have never been deployed. The annual cost of one such employee has soared from $60,000 to $206,000 in less than 10 years. Much of the cost comes from policies that allow retirement after 20 years of service with a pension and military health care for life and premiums as cheap as $19 per month. "This system encourages our military to leave at 20 years, when they are most productive and experienced, and then pays them and their families and their survivors for another 40 years," while the military and veterans health care system costs $175 billion a year, said Arnold Punaro, chairman of a task group studying the issue at the Defense Business Board, itself a Pentagon commission. Reducing those benefits would be the hardest change of all, defense experts said, which may be one reason Gates has left it off of his immediate agenda.
As for paperwork, Gates said the Pentagon produced more than 700 reports last year and 65 commissions oversee or advise his office alone. He plans to cut report and commission spending by 25 percent and mandate that a price tag accompany any new proposal.
Meanwhile, hawks of a different feather argue that it's not appropriate to use the deficit as an excuse to undermine military readiness. Max Boot, a senior fellow at the Council on Foreign Relations, recently wrote in the Washington Post that since the Revolutionary War, shrinking the armed forces after conflicts has made the next fight worse. "If there were ever evidence that it's impossible to learn from history -- or at least that it's difficult for politicians to do so -- this is it," he wrote. And Gates faces the argument on Capitol Hill that national security spending should go untouched in wartime.
"I fear that the defense budget will become a fashionable target for cuts, thereby creating some real peril for our country," Sen. Joseph Lieberman, I-Conn., said recently. Lawmakers looking for ways to reduce the $1.4 trillion budget deficit will run into opposition from the many members who have military bases or contractors in their states.
Some defense analysts agree that the real problem lies at the Pentagon, not in war spending, pointing out that less than a quarter of the total budget goes to Iraq and Afghanistan. "The argument that you can't cut in wartime is contradicted by the realities of where the money's going," said William Hartung, director of the Arms and Security Initiative at the New America Foundation.
Hartung said the problems stem from a wasteful culture that doesn’t consider costs, resulting in gold-plated systems that are delayed and over budget. "First the companies overstate what they're able to do,” he said. “Then the Pentagon says it would be nice to have this extra capability without looking at what that’s going to cost." Hartung says this is particularly absurd given U.S. global military dominanceThe U.S. Navy is larger than the next 13 largest navies combined, and 11 of those are allies. America is on pace to have 20 times more fighter jets than the Chinese by 2020. Gates hasn't gone after the size of his fleets, however.
But last year, he convinced Congress to end production of the F-22 fighter and limit other weapons systems. This year, he's aiming to do the same with an alternative engine to the F-35 fighter, wielding a veto threat from the president. On Tuesday, the Army announced it would delay its Ground Combat Vehicle.
"In a funny way, the fact that Gates is going out empowers him," said Peterson, of Taxpayers for Common Sense.
Soloway said Gates may just be trying to get the Pentagon to read the writing on the wall. "The department needs to get out ahead of the curve and eliminate some of the waste in the non-added-value stuff it's doing," he said. "If it doesn't do it itself, there's always a possibility someone else will do it for you."
That may be President Obama's deficit commission, which could recommend its own defense cuts in December that would fall to the next secretary to enforce. "I think the administration is still committed to this agenda," said Hartung. "It's really a question of whether the person who replaces Gates will be as effective an advocate."
Pentagon Seeks Modest Growth (Wall Street Journal)
Lockheed Martin Spent $3.2 million on Lobbying (Associated Press)
Pentagon Spending - Music Goes Round (Huffington Post)