Hagel: A Secretary of Defense Reforms?

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 repeatedlydocumented:

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 21st century realities and challenges,” as he said.

For this, he deserves praise.