Tuesday, May 11, 2010
Defense Secretary Robert Gates delivered a much-ballyhooed speech this past week about the urgent need to cut defense spending by at least $15 billion. It is worth reading! I had a different take than other media coverage, though. . .
Defense Secretary Robert Gates delivered a much-ballyhooed speech this past week about the urgent need to cut defense spending by at least $15 billion. It is worth reading!
Government Executive editor Tom Shoop featured it in three separate blog posts (Part One, Part Two, Part Three), noting too many contractors and not enough contract officers to oversee their work, and the need to address “sacred cows” such as pay and health benefits.
But I saw a different angle when reading the speech. Here are some excerpts about overhead costs:
“Another category ripe for scrutiny should be overhead – all the activity and bureaucracy that supports the military mission.  According to an estimate by the Defense Business Board, overhead, broadly defined, makes up roughly 40 percent of the Department’s budget. . . . Going forward, some questions to be considered should be:
  • How many of our headquarters and secretariats are primarily in the business of reporting to or supervising other headquarters and secretariats, as opposed to overseeing activity related to real-world needs and missions?
  • How many executive or flag-officer billets could be converted to a lower grade, with a cascading effect downward – where two-star deputies become one-star deputies, assistant secretaries become deputy assistant secretaries – to create a flatter, more effective, and less costly organization?
  • How many commands or organizations are conducting repetitive or overlapping functions – whether in logistics, intelligence, policy, or anything else – and could be combined or eliminated altogether?
“Almost a decade ago, Secretary Rumsfeld lamented that there were 17 levels of staff between him and a line officer.  The Defense Business Board recently estimated that in some cases the gap between me and an action officer may be as high as 30 layers. . . .
“Therefore, as the Defense Department begins the process of preparing next year’s Fiscal Year 2012 budget request, I am directing the military services, the joint staff, the major functional and regional commands, and the civilian side of the Pentagon to take a hard, unsparing look at how they operate – in substance and style alike.  The goal is to cut our overhead costs and to transfer those savings to force structure and modernization within the programmed budget.  In other words, to convert sufficient “tail” to “tooth” to provide the equivalent of the roughly two to three percent real growth. . . .
“What is required going forward is not more study.  Nor do we need more legislation.  It is not a great mystery what needs to change.  What it takes is the political will and willingness . . . to make hard choices – choices that will displease powerful people both inside the Pentagon and out.”
What is interesting is that many of the same observations were featured almost two decades ago in the Reinventing Government report – too much overhead and overly-complex and inefficient business systems that stymie the delivery of mission-critical services.  That effort also called for cutting overhead, but we learned that headquarters doesn’t cut headquarters, it cuts field staff. . . . It will be interesting to see how Secretary Gates chooses to act on his vision!
There is some action already to stem some overhead costs, especially in the area of contract reform. See tomorrow’s entry!