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  • Cost Cutting?
    Posted by Bettina Chavanne 3:42 PM on Jun 07, 2010

    Everybody must cut costs.


    Now that Secretary of Defense Robert Gates has laid down the law, cost-cutting measures are coming swiftly from every direction. On June 4, Gates directed the military to take “deliberate and aggressive measures to protect critical current and future capabilities, ultimately securing real growth in the resources allocated to our war fighters.”


    Submissions for cost-cutting are due by July 30, in time for Program Objectives Memorandum (POM) 2012 planning. Gates wants cuts everywhere. He assigned each military department and agency individual goals for fiscal 2012 through 2016. The cuts over that time total over $100 billion.


    Deputy Defense Secretary William Lynn also briefed extensively on necessary cuts in early June. He said that this is not a single process, but three. Nonessential programs (pure overhead) are taking up 40 percent of the budget. "We're trying to reduce that and shift the resources into the force structure and modernization accounts,” Lynn said. Within force structure and modernization, Lynn said changes seem to be on track. He cited the end of F-22 production and the cancellation of the VH 71 as well as the end of the alternate engine and end of the buy on the C-17 as “efficiencies.” The third piece of the puzzle, is to “improve the operating efficiencies of the department itself,” Lynn said. “We are talking about a flatter organization, fewer headquarters, smaller staffs, generally more efficiency.”


    Interestingly, Lynn said “this is not an effort to reduce the defense budget. This is an effort to operate within the defense budgets we've been given.” Does this mean that cost-cutting isn't really cost-cutting? Lynn continued by saying “this is not about reducing the top line. This is about operating within a constrained topline and trying to get enough resources into that.”


    Last but not least, one should not forget that Pentagon acquisitions chief Ashton Carter recently critiqued the Nunn-McCurdy process, calling it cumbersome and expensive. He said the Pentagon should be catching programs when they hit the 5% overage mark, or the 10 or 20% overage mark. A full evaluation of the Nunn-McCurdy process is due this week.


    So with all this cost-cutting talk, where are the real savings and when are they going to show up? Programs seem to be getting canceled (a process that costs a bundle of money) and calls for greater attention to the requirements process and procurement seem to be getting louder. But the Pentagon keeps spending and spending and spending. Am I missing something?

    Tags: ar99, budgets, Gates

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