Gates Reveals Budget Efficiencies, Reinvestment Possibilities

WASHINGTON, Jan. 6, 2011 — The Defense Depart­ment has found $154 bil­lion in effi­cien­cies over the next five years and will be able to invest $70 bil­lion of that saved mon­ey in more deserv­ing accounts, Defense Sec­re­tary Robert M. Gates said today.
The sec­re­tary announced the sav­ings and rein­vest­ing of the effi­cien­cies dur­ing a Pen­ta­gon news con­fer­ence.

Gates empha­sized that the nation is at war and faces a range of future secu­ri­ty threats. “It is impor­tant to not repeat the mis­takes of the past by mak­ing dras­tic and ill-con­ceived cuts to the over­all defense bud­get,” he said. “At the same time, it is imper­a­tive for this depart­ment to elim­i­nate waste­ful, exces­sive and unneed­ed spend­ing.”

Gates said he wants every dol­lar invest­ed in defense spent in the smartest man­ner. The effi­cien­cies con­tin­ue a process to reshape and re-bal­ance the defense bud­get that has already saved the nation $300 bil­lion, he not­ed.

The sec­re­tary announced effi­cien­cies in mod­ern­iza­tion accounts. He said he agrees with the Navy and Marine Corps rec­om­men­da­tion to can­cel the expe­di­tionary fight­ing vehi­cle pro­gram, which already has con­sumed $3 bil­lion to devel­op and would require anoth­er $12 bil­lion to build.

Gates said he also will restruc­ture the F‑35 joint strike fight­er pro­gram. The Air Force and Navy vari­ants of the fight­er are on sched­ule, but the short take-off and land­ing vari­ant is expe­ri­enc­ing sig­nif­i­cant test­ing prob­lems.

“As a result, I am plac­ing the STOVL vari­ant on the equiv­a­lent of a two-year pro­ba­tion,” Gates said. “If we can­not fix this vari­ant dur­ing this time frame and get it back on track in terms of per­for­mance, cost and sched­ule, then I believe it should be can­celled.”

The sec­re­tary said he also wants changes to the military’s TRICARE med­ical pro­gram, not­ing that fees have not risen since the pro­gram was intro­duced in 1995. He said he will pro­pose mod­est increas­es to fees for work­ing-age mil­i­tary retirees.

These changes also will be part of the fis­cal 2012 bud­get request. The Army will can­cel pro­cure­ment of the SLAMRAAM sur­face-to air-mis­sile and the non-line-of-sight launch sys­tem. The effi­cien­cies will change the way the depart­ment uses infor­ma­tion tech­nol­o­gy, con­sol­i­dat­ing hun­dreds of infor­ma­tion tech­nol­o­gy cen­ters to save more than $1 bil­lion a year, Gates said.

“At the same time,” he added, “I am not sat­is­fied with the progress we have made in this area since August, and expect to make a fol­low-on announce­ment with a spe­cif­ic plan of action by next month.”

The effi­cien­cies will cut the num­ber of con­trac­tors. “Over­all, we will cut the size of the staff sup­port con­trac­tor cadre by 10 per­cent per year for three years and real­ize near­ly $3 bil­lion in total sav­ings,” the sec­re­tary said.

A third effi­cien­cy will trim the size of the defense work force and place more in areas with the most press­ing need, he said. This should yield $4 bil­lion in sav­ings, he added. Gates is also said he’s ini­ti­at­ing changes in the defense intel­li­gence appa­ra­tus, and will elim­i­nate or down­grade gen­er­al and flag offi­cer posi­tions. He will also elim­i­nate or down­grade 200 senior exec­u­tive posi­tions.

The effi­cien­cies will elim­i­nate the Office of the Assis­tant Sec­re­tary of Defense for Net­work Intel­li­gence and Infor­ma­tion, the Busi­ness Trans­for­ma­tion Agency and the U.S. Joint Forces Com­mand, Gates said, though rough­ly 50 per­cent of Joint Forces Com­mand will sur­vive and be assigned to oth­er orga­ni­za­tions.

In April, Gates instruct­ed the ser­vices to find at least $100 bil­lion over five years in over­head sav­ings that they could keep and shift to high­er-pri­or­i­ty pro­grams. They have done so. In addi­tion, defense agen­cies have found $54 bil­lion in pos­si­ble effi­cien­cies.

Air Force lead­ers have pro­posed effi­cien­cies that will total $34 bil­lion over five years. The Army has pro­posed $29 bil­lion in sav­ings, and the Navy looks to sav­ings of $35 bil­lion over five years.

Of the $100 bil­lion in sav­ings, the ser­vices will use about $28 bil­lion to deal with high­er-than-expect­ed oper­at­ing expens­es. These costs include health care, pay and hous­ing allowances, sus­tain­ment of weapons sys­tems, depot main­te­nance, base sup­port and flight hours and oth­er train­ing.

“Frankly, using the sav­ings in this way was not my orig­i­nal intent or pref­er­ence,” Gates said, “but we have lit­tle choice but to deal with these so-called ‘must-pay’ bills –- and bet­ter to con­front them hon­est­ly now than through raid­ing invest­ment accounts lat­er.”

But this still leaves the ser­vices with $70 bil­lion to rein­vest in high­er pri­or­i­ty sys­tems. In the Air Force, this will mean the ser­vice can buy more Reaper unmanned aer­i­al vehi­cles and enable the ser­vice to move this capa­bil­i­ty from the war bud­get to the base bud­get. It will also allow the ser­vice to increase pro­cure­ment of the evolved expend­able launch vehi­cle and to mod­ern­ize radars aboard the F‑15 Eagle to keep the fight­er jet fly­ing and fight­ing longer.

The Air Force also will be able to invest in devel­op­ment of a long-range, nuclear-capa­ble bomber.

The Army will invest in sol­diers by improv­ing sui­cide-pre­ven­tion and sub­stance-abuse coun­sel­ing. The ser­vice will also mod­ern­ize its bat­tle fleets of Abrams tanks, Bradley fight­ing vehi­cles and Stryk­er wheeled vehi­cles. The ser­vice also will accel­er­ate field­ing of the newest tac­ti­cal com­mu­ni­ca­tions net­work and will invest in more unmanned aer­i­al vehi­cles and a new unmanned heli­copter.

The Navy will accel­er­ate pro­cure­ment of elec­tron­ic jam­ming gear and fund refur­bish­ment of Marine Corps equip­ment. The ser­vice is also look­ing to devel­op a new gen­er­a­tion of sea-borne unmanned strike and sur­veil­lance air­craft, and to buy more F‑18 Super Hor­nets. The Navy also will be able to buy more ships, includ­ing a destroy­er, a lit­toral com­bat ship and fleet oil­ers.

Gates stressed the need to make cuts care­ful­ly and judi­cious­ly.

“To main­tain the kind of mil­i­tary need­ed for America’s lead­er­ship role requires not only ade­quate lev­els of fund­ing, but also fun­da­men­tal­ly chang­ing the way our defense estab­lish­ment spends mon­ey and does busi­ness,” Gates said. “That is why it is so impor­tant to fol­low through on the pro­gram of reform and over­head reduc­tion.

“This depart­ment sim­ply can­not risk con­tin­u­ing down the same path -– where our invest­ment pri­or­i­ties, bureau­crat­ic habits and lax atti­tude towards costs are increas­ing­ly divorced from the real threats of today, the grow­ing per­ils of tomor­row and the nation’s grim finan­cial out­look,” he added.

U.S. Depart­ment of Defense
Office of the Assis­tant Sec­re­tary of Defense (Pub­lic Affairs)

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