USA — Gates Calls for Significant Cuts in Defense Overhead

ABILENE, Kan. , May 8, 2010 — Defense Sec­re­tary Robert M. Gates used the occa­sion of the 65th Anniver­sary of the Vic­to­ry in Europe to declare war on duplica­tive over­head, bloat and need­less spend­ing in the Defense Depart­ment.

In a speech at the Eisen­how­er Library here today, Gates called for a reduc­tion in over­head for the depart­ment, and said he wants the depart­ment to take a hard, real­is­tic look at what defense capa­bil­i­ties Amer­i­ca real­ly needs in the 21st Cen­tu­ry.

The Defense Depart­ment must take a hard look at every aspect of how it is orga­nized, staffed and oper­at­ed, Gates said in the speech.

“In each instance we must ask: First, is this respect­ful of the Amer­i­can tax­pay­er at a time of eco­nom­ic and fis­cal duress?” he said. “And sec­ond, is this activ­i­ty or arrange­ment the best use of lim­it­ed dol­lars, giv­en the press­ing needs to take care of our peo­ple, win the wars we are in, and invest in the capa­bil­i­ties nec­es­sary to deal with the most like­ly and lethal future threats?”

The sec­re­tary called for a two to three per­cent reduc­tion in over­head costs in the fis­cal 2012 bud­get request. The mon­ey saved can be ded­i­cat­ed to force struc­ture – the for­ma­tions that fight our nation’s wars.

Gates not­ed that Dwight D. Eisen­how­er, who served as pres­i­dent from 1953 to 1961, led the Allied armies to vic­to­ry over Nazi Ger­many in 1945 and con­front­ed the Sovi­et Union in some of the cold­est days of the Cold War. Giv­en his pres­tige as a five-star gen­er­al, Gates said, Eisen­how­er was able to make the tough choic­es need­ed for the U.S. mil­i­tary to be bal­anced and ready.

Still, Gates con­tin­ued, Eisen­how­er main­tained “his pas­sion­ate belief that the U.S. should spend as much as nec­es­sary on nation­al defense – and not one pen­ny more,” Gates said. “And with his peer­less cre­den­tials and stand­ing, he was unique­ly posi­tioned to ask hard ques­tions, make tough choic­es, and set firm lim­its.” The sec­re­tary said he does­n’t see that will­ing­ness inside or out­side the Pen­ta­gon any­more.

“Look­ing back from today’s van­tage point, what I find so com­pelling and instruc­tive was the sim­ple fact that when it came to defense mat­ters, under Eisen­how­er real choic­es were made, pri­or­i­ties set and lim­its enforced,” he said. “This became increas­ing­ly rare in the decades that fol­lowed, despite the best efforts of some of my pre­de­ces­sors and oth­er attempts at reform over the years.”

Since the ter­ror attacks of 9–11, the Defense base bud­get – not includ­ing mon­ey for the wars in Iraq and Afghanistan – has near­ly dou­bled, Gates said. The gush­er of mon­ey has end­ed, and giv­en America’s dif­fi­cult eco­nom­ic cir­cum­stances, mil­i­tary spend­ing on things large and small can and should expect clos­er, harsh­er scruti­ny, he said.

The sec­re­tary is not advo­cat­ing whole­sale cuts. He said the nation is still at war and some for of growth must be main­tained to fight the bat­tles. Main­tain­ing the brigades, reg­i­ments, wings and ships will require real growth in the defense bud­get rang­ing from two and three per­cent above infla­tion.

“In this year’s bud­get request, the Defense Depart­ment asked for, and I hope will receive, just under two per­cent – rough­ly that lev­el of growth,” Gates said. But with­out change, this isn’t real­is­tic for the long run.Any change will have to over­come oppo­si­tion inside the Pen­ta­gon and on Capi­tol Hill.

Gates point­ed to the alter­na­tive engine for the F‑35 Joint Strike Fight­er and the C‑17 air­lifter pro­grams as exam­ples. The depart­ment does not want or need these pro­grams, and they were not includ­ed in Pres­i­dent Obama’s defense bud­get request. Yet Con­gress may put both pro­grams back in the bud­get at a poten­tial cost of bil­lions. “I have strong­ly rec­om­mend­ed a pres­i­den­tial veto if either pro­gram is includ­ed in next year’s defense bud­get leg­is­la­tion,” Gates said.

Reg­u­lar mil­i­tary health care is anoth­er bud­get break­er. Defense Depart­ment health care costs have risen from $19 bil­lion in 2000 to about $50 bil­lion today. Dur­ing that time, the pre­mi­ums for TRICARE, the mil­i­tary health insur­ance pro­gram, have not risen.

“Many work­ing age mil­i­tary retirees – who are earn­ing full-time salaries on top of their full mil­i­tary pen­sions – are opt­ing for TRICARE even though they could get health cov­er­age through their employ­er, with the tax­pay­er pick­ing up most of the tab as the result,” the sec­re­tary said.

Both Gates and for­mer Defense Sec­re­tary Don­ald H. Rums­feld tried to imple­ment mod­est increas­es in pre­mi­ums and co-pays to help bring costs under con­trol. Con­gress and vet­er­ans groups opposed these increas­es and they “the pro­pos­als rou­tine­ly die an igno­min­ious death on Capi­tol Hill,” Gates said.

The sec­re­tary said he under­stands these polit­i­cal and fis­cal real­i­ties, but says there has to be real reform in the way DoD does busi­ness.

“For the bet­ter part of two years I have focused on the Pentagon’s major weapons pro­grams – to make sure we are buy­ing the right things in the right quan­ti­ties,” he said. “Last year, the depart­ment made more than 30 tough choic­es in this area, can­celling or cur­tail­ing major weapons sys­tems that were either per­form­ing poor­ly or excess to real world needs – about $330 bil­lion dol­lars worth as mea­sured over the life of the ter­mi­nat­ed pro­grams. We also began to over­haul the Pentagon’s process­es for acqui­si­tions and con­tract­ing.” Reform­ing bud­get­ing prac­tices and con­tract­ing is a first step, and the depart­ment has begun this process, he said. The depart­ment is hir­ing more con­tract­ing pro­fes­sion­als. “Anoth­er cat­e­go­ry ripe for scruti­ny should be over­head – all the activ­i­ty and bureau­cra­cy that sup­ports the mil­i­tary mis­sion,” Gates said. Over­head makes up rough­ly 40 per­cent of the defense bud­get.

“Dur­ing the 1990s, the mil­i­tary saw deep cuts in over­all force struc­ture – the Army by near­ly 40 per­cent,” Gates said. “But the reduc­tion in flag offi­cers – gen­er­als and admi­rals – was about half that. The department’s man­age­ment lay­ers – civil­ian and mil­i­tary – and num­bers of senior exec­u­tives out­side the ser­vices grew dur­ing that same peri­od.”

While pri­vate sec­tor busi­ness­es have flat­tened and stream­lined the mid­dle and upper ech­e­lons, the Defense Depart­ment con­tin­ues to main­tain a top-heavy hier­ar­chy that more reflects 20th Cen­tu­ry head­quar­ters super­struc­ture than 21st Cen­tu­ry real­i­ties.

“Two decades after the end of the Cold War led to steep cuts in U.S. forces in Europe, our mil­i­tary still has more than 40 gen­er­als, admi­rals or civil­ian equiv­a­lents based on the con­ti­nent, Gates said. “Yet we scold our allies over the bloat in NATO head­quar­ters.”

This has bred a bureau­cra­cy with its hands in every­thing, he said. A request for a mil­i­tary dog-han­dling team for Afghanistan, for exam­ple, must be processed and val­i­dat­ed through five four-star head­quar­ters before being approved.

“This dur­ing an era when more and more respon­si­bil­i­ty – includ­ing deci­sions with strate­gic con­se­quences – is being exer­cised by young cap­tains and colonels on the bat­tle­field,” Gates said.

He gave an exam­ple of how dif­fi­cult it is to make even mod­est adjust­ments in the Pen­ta­gon. “The Depart­ment com­mis­sioned a study a few years ago to assess the flag-offi­cer require­ments of the ser­vices,” he said. “The study iden­ti­fied 37 posi­tions – out of more than 1,300 active and reserve bil­lets – that could be rea­son­ably con­vert­ed to a low­er rank. None were down­grad­ed.”

Gates said he has a few ques­tions: How many of these jobs, head­quar­ters or sec­re­tari­ats are actu­al­ly doing a need­ed mis­sion and how many are super­vis­ing oth­er head­quar­ters and sec­re­tari­ats? How many of the gen­er­al and flag offi­cer posi­tions or those in the civil­ian senior exec­u­tive ser­vice could be con­vert­ed to a low­er grade?

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?

Final­ly, these changes have to be done with a real­is­tic look at the threats. “Before mak­ing claims of require­ments not being met or alleged ‘gaps’ – in ships, tac­ti­cal fight­ers, per­son­nel or any­thing else – we need to eval­u­ate the cri­te­ria upon which require­ments are based and the wider real world con­text,” he said.

“For exam­ple, should we real­ly be up in arms over a tem­po­rary pro­ject­ed short­fall of about 100 Navy and Marine strike fight­ers rel­a­tive to the num­ber of car­ri­er wings, when America’s mil­i­tary pos­sess­es more than 3,200 tac­ti­cal com­bat air­craft of all kinds?” he asked.

“Does the num­ber of war­ships we have and are build­ing real­ly put Amer­i­ca at risk when the U.S. bat­tle fleet is larg­er than the next 13 navies com­bined, 11 of which belong to allies and part­ners? Is it a dire threat that by 2020 the Unit­ed States will have only 20 times more advanced stealth fight­ers than Chi­na?”

Gates said Eisen­how­er, with his five-stars and life­time of expe­ri­ence in mil­i­tary affairs, asked these same ques­tions and made these choic­es, and he was able to make them stick. “There­fore, as the Defense Depart­ment begins the process of prepar­ing next’s years 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,” he said. “The goal is to cut our over­head costs and to trans­fer those sav­ings to force struc­ture and mod­ern­iza­tion with­in the pro­grammed bud­get.”

The sec­re­tary wants mon­ey tak­en from the “tail” part of the defense dog to the “tooth.” He said he wants enough sav­ings to pro­vide the equiv­a­lent of the rough­ly two to three per­cent real growth. This would give the depart­ment the resources need­ed to sus­tain America’s com­bat pow­er in a time of war and make invest­ments to pre­pare for an uncer­tain future.

“Sim­ply tak­ing a few per­cent off the top of every­thing on a one-time basis will not do,” Gates said. “These sav­ings must stem from root-and-branch changes that can be sus­tained and added to over time.”

It is time to act, the sec­re­tary said. “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, as Eisen­how­er pos­sessed, to make hard choic­es – choic­es that will dis­please pow­er­ful peo­ple both inside the Pen­ta­gon and out.”

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