On Monday, Aug. 9, I was invited to a meeting with Secretary of Defense Robert Gates immediately after his press conference announcing some spending modifications. I also attended his press conference before the on the record meeting.
The others invited to the same were David Berteau (CSIS); Dov Zakheim (BAH); Eric Edelman (CSBA), Gordon Adams (Stimson); James McAleese (McAleese Assoc.), John Nagl (CNAS); Loren Thompson (Lexington); Mackenzie Eaglen (Heritage), and Thomas Donnelly (AEI).
Based on Gates' comments and the DOD press release, I understand the announcements to include the following (with my comments appended):
1) 10 percent reduction per year for three years in "support contractors." (The total number of these contractors appears to be unknown. One estimate is that the DOD contractors number 790,000; other numbers in are higher. In any case, the denominator for this 10 percent reduction appears to be unknown. Also, it is unclear if this 10 percent reduction pertains to all contractors or a subset. If the correct number is 790,000, will there actually be three years of reductions of 790,000 of these people?)
2) A freeze of the number of OSD, defense agency, and COMCOM "billets" at the 2010 level for three years. Plus, no more OSD positions to replace contractors ("except for critical needs") and a "clean sheet review" of what everybody is doing. This "rebaselining" will result in a minimum reduction of 50 percent of the "growth in billets since 2000" and a reduction of at least 50 generals-admirals and 150 senior civilians. (It is not clear how much will result from this; a freeze at current levels for the total OSD, etc bureaucracy is quite literally nothing, but a 50 percent reduction of the increase since 2000 will mean more. However, on September 10, 2001 then-Secretary of Defense Rumsfeld complained about the bloat and waste in the Pentagon bureaucracy back then. Permitting almost 50 percent of the bureaucratic growth since then seems extremely modest.)
3) Freeze and reduce the number of reports sent (by demand) to Congress and reduce "advisory" study funding by 25 percent. (While many of the report requirements that Congress imposes are superfluous and address some sort of political issue by appearing to do something, some reports to Congress [such as on the F-35's cost growth] are important. This process needs to be monitored to ensure the baby is not thrown out instead of the bathwater.)
4) Review and possibly eliminate some of the 65 boards and commissions, costing $75 million per year, and cut their funding by al least 25 percent. (Unmentioned but more important, I believe, is to change to rules for membership on these various boards and commissions: any person with any financial connection, directly or indirectly, with defense manufacturers, investment firms, or DOD itself should be excluded.)
5) 10 percent reduction in funding for intelligence advisory and assistance contractors and a freeze of SES positions in defense intelligence organizations. (Again, the denominator for this 10 percent reduction appears to be an unknown. How can you downsize an operation you have not measured?)
6) Eliminate the office of the assistant secretary of defense networks, integration and information, the Business Transformation Agency, and Joint Forces Command. (Every long journey must start with the first step; these eliminations are hopefully the start of a very long list.)
7) A task force will oversee the implementation of these measures over the next 90 to 120 days. (After Gates is gone, the new secretary will be tested as the bureaucracy and Congress try to walk most of this backward. From what I know of the prime public candidates to replace Gates, the bureaucracy et al. will largely succeed.)
Overall assessment: Gates has made it clear that he seeks to defend the defense budget from real cuts that he expects from Congress (e.g. Barney Frank alternative budget, which he mentioned in passing) and the deficit commission (which he said he wants to talk to). None of the money he seeks to save with these efforts would leave the defense budget; he simply wants to transfer overhead spending to other parts of DOD.
While he explicitly did not, repeat not, say so, I suspect Gates knows he will lose his fight against cuts and that he seeks with these actions to help DOD survive the cuts that are coming. In doing so, these efficiencies are inadequate. They will not transform the Pentagon into something that can survive significant budget reductions and be anything but the same institution at a lower level of spending. That, of course, will be a real disaster because even with dramatically growing DOD budgets our forces have become smaller, older and less ready to fight.
On the other hand, I believe, Gates deserves credit for starting a process to attempt to deal with the fringes of the defense problem. He is the first secretary of defense to attempt to do so in decades, and he is earnest in his efforts, I believe. There is a long, long way to go, however. I and others have written at some length about what needs to be done; those proposals are readily available upon request. Strangely, the Pentagon says these new proposals are part of the $102 billion, five year "savings" announced last May. While, again, nothing was said to indicate it, I believe there is something strange about this $102 billion "savings." It's not just that it amounts to very, very little over five years of DOD spending (and that it's not a savings but an internal transfer), but I have come to suspect that it's a rather meaningless number. Instead, it is a device being used to try to extract some efficiencies from the DOD bureaucracy and DOD contractors, and when the real cuts start occurring, these same ideas (and more importantly expansions of them) will be employed to adjust to real cuts.
Those real cuts are not coming from Capitol Hill. Although there has been some hyperventilated talk about bigger than usual cuts in the 2011 DOD appropriations bills coming out of the House and Senate Appropriations Committees (up to $8 billion), much of those cuts may be quite phony. Although the reports and bills are not yet available from the HAC or SAC, a summary from the HAC (at http://appropriations.house.gov/images/stories/pdf/def/FY11_defense_summary.7.28.10.pdf) makes me suspicious that they are up to their usual tricks. Rather than programmatic cuts, it may be that much of the reductions will be gimmicks (such as "revised economic assumptions") and deferments of spending to future years (such as "unobligated expenditure" and "civilian underexecution" actions) that over the long run save nothing. Watch this space when the details become available.
Also, the political porkers are queuing up to make sure that their own pigs stay fat and someone else pays for budget restraint. In this regard, check out the incredibly selfish statements of the governor and congressional delegation of Virginia that queued up in a hyper-flash to announce that someone else needs to save money in the defense budget and that the Norfolk-based Joint Forces Command (now fingered by internal studies, a former commander, and the secretary of defense as useless) is just the kind of defense spending they like. Shame on them. Also, the usual political hacks are trying to savage the Obama administration for being anti-defense for daring to take a penny of bloat from the Pentagon. In that regard, see the public comments of the top ranking Republican on House Armed Services, Congressman Howard "Buck" McKeon of California. Clearly, the change agents for the coming adjustments in the defense budget will not be the congressional porkers and hacks on committees like the appropriations and Armed Services committees.
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