Hagel: A Secretary of Defense Reforms?

April 6, 2013

Secretary of Defense Chuck Hagel

Chuck Hagel came out swinging Wednesday in his first major address as Secretary of Defense, putting the bloated Pentagon on notice.

Hagel bemoaned that since 9/11 the military has “grown significantly older—as measured by the age of major platforms—and enormously more expensive in just about every area.” And, unlike his predecessor, Leon Panetta, Hagel refrained from using hyperbolic rhetoric to describe reductions in Pentagon spending, instead noting that “the biggest long-term fiscal challenge facing the Department is not the flat or declining top-line budget, it is the growing imbalance in where that money is being spent internally.”

More importantly, he seems prepared to do something about the Pentagon’s bloated budget. “It is already clear to me that any serious effort to reform and reshape our defense enterprise must confront the principal drivers of growth in the Department’s base budget—namely acquisitions, personnel costs, and overhead,” said Hagel.

The Department’s personnel system merits a hard look, and some hard questions should be asked, according to Hagel, who wants to know “how many people we have both military and civilian, how many we need, what these people do, and how we compensate them for their work, service, and loyalty with pay, benefits and health care.”

Hagel also sharply criticized the growing top-heaviness at the Pentagon, which POGO has repeatedly documented:

Within the force, what is the right balance between officers and enlisted?...Today the operational forces of the military—measured in battalions, ships, and aircraft wings—have shrunk dramatically since the Cold War era. Yet the three and four star command and support structures sitting atop these smaller fighting forces have stayed intact, with minor exceptions, and in some cases they are actually increasing in size and rank.

More broadly, despite good efforts and intentions, it is still not clear that every option has been exercised or considered to pare back the world’s largest back-office.

Regarding the acquisition system, he said:

We need to continually move forward with designing an acquisition system that responds more efficiently, effectively and quickly to the needs of troops and commanders in the field. One that rewards cost-effectiveness and efficiency, so that our programs do not continue to take longer, cost more, and deliver less than initially planned and promised.

While all this was welcome news to organizations, such as POGO, that have been fighting against waste, fraud, and abuse at the Pentagon for decades, Hagel was curiously short on reform ideas for the $360 billion gorilla in the Pentagon budget—contractors. In fact, he made just one mention of the “defense industrial base,” noting that it was not spared from sequestration.

Hagel must address our over-reliance on contractors, which results in a distorted policy-driver of contractor profits over sound national security strategy. In addition, taxpayer dollars are misspent or wasted because contractors often cost more to do the same jobs as federal workers. There are plenty of specific ideas for reforming Pentagon contracting, like reducing the taxpayer-financed compensation of contractor executives or even just providing the public with access to contractor workforce size and cost data, both of which POGO has advocated for.

Additionally, sequestration appears to have had little impact thus far on the amount of money flowing to contractors. As Nick Taborek reports in Bloomberg Government (pay-wall), the Pentagon awarded contracts “valued at as much as $39.4 billion in March, 71 percent more than the prior month, even as automatic federal budget cuts took effect.”

Despite the lack of specific proposals to rein in contract spending, Hagel was remarkably more critical of Pentagon problems than his predecessor had been. Hagel could have stayed on Panetta’s fear-mongering track, but he changed course and seems headed towards responsible reforms and towards a Pentagon “better suited to 21^st century realities and challenges,” as he said.

For this, he deserves praise.

Image from the Department of Defense.

Topics: National Security

Related Content: Budget, Defense, Star Creep, Wasteful Defense Spending

Authors: Ben Freeman, Ph. D.

Submitted by Dfens at: April 11, 2013

The fact is, the DoD does have the power to fix their contracting situation. The older methods of contracting still exist. They were not erased by the newer Federal Acquisition Rules that allow profit to be paid on development costs. This is the main way DoD contracts reward contractors for dragging out development and jacking up costs is by paying them $1.10 for every $1.00 they spend in development. If you got a contract like that, which would it encourage you to do, save money or spend like there's no tomorrow to maximize your profit? Pretty obvious, isn't it? If Hagel is saying what everyone else has said, then let's see some quotes from everyone else. He's not. This acknowledgement of the fundamental flaw in today's procurement system is quite unique. We won't know if he'll do the right thing after saying the right thing, but saying the right thing is at least a start. It is at least an acknowledgement of the real root of our problem.

Submitted by Ben Freeman at: April 8, 2013

Dfens and PSCcus, Thank you for your comments. We care about internal oversight as much as government oversight here at POGO, so I thank you for your critical analyses. I certainly agree with both of you that we’ve heard much of this rhetoric before. Hagel is, in my view, a breath of fresh air from his predecessor, who seemed to blindly defend the Pentagon’s budget and ignore much of the Department’s shortcomings. He is, however, not perfect. He could have been crisper and could have given much more specifics on how he’d rein in some of these problems. And, as you mentioned PSCcus, he basically ignored any discussion of missions (both internal and external) which, I completely agree, should be the driver of all efficiency initiatives. I also completely agree that some of his greatest obstacles lie outside of the Pentagon, at the White House and on Capitol Hill. But, the cheerleader Congressmen aren’t born, they’re grown and fed by the powerful contractor lobby that annually dumps tens of millions of dollars into the political process. I do, however, agree that there is ample waste to be found in the nearly 800,000 strong DoD civilian workforce. We’ve begun analyzing this workforce and will hopefully have more concrete proposals related to it in the future. Once again, thank you for your comments. -Ben

Submitted by Dfens at: April 8, 2013

Wow, a procurement system that rewards "cost effectiveness and efficiency" instead of sloth and stupidity! Why didn't I think of that? Oh yeah, I've been saying that for years. It's good to see that maybe someone is starting to listen. No wonder McCain didn't like this guy.

Submitted by PSCcus at: April 7, 2013

Dr. Freeman, Everyone knows Panetta, tho capable of more, was just a cheerleader in the thrall of careerists and blinded by thanking everyone for their service, even the flags and colonels who have a lot to do with the disgraceful acquisition track record, other waste, and acting like we must give them a blank check, or we all die. We should be a little concerned about how Chuck comes across. He needs to be crisper., He does have the cojones to cut, but the problem is the WH will go all wishy washy when push comes to shove. And don't be so concerned about contractors. They may waste some of the money in their contracts, but the door is opened to that by political appointees, flags, and other mil, and civilian careerists. You attribute much too much power to contactor lobbying. The only lobbying that counts in these matters is really that by cheerleader Congressman. You could more easily go after the waste, fraud and abuse by the office-bound DoD civilians, be they Federal emps or contractors filling federal jobs. In doing this, you need to zero in on the value of their particular "missions," not their loaded costs, which always understate the government employee's direct and indirect costs. POGO used to have a much sharper laser on these things, but seems to be losing, well, er, its edge. Please put more horsepower on this. Thanks.

Leave A Comment

Nickname
Comment
Enter this word:	Change

Related Post

x

Pentagon Supports Reducing LCS Fleet to 24 Ships

Read More

Project On Government Oversight (POGO)

1100 G Street, NW, Suite 500    Washington, DC 20005
Phone: (202) 347-1122     Fax: (202) 347-1116     Email: info@pogo.org

POGO is a 501(c)(3) organization. All donations are tax-deductible.

Center for Defense Information at POGO

Founded in 1981, the Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.