Former Under Secretary Of Defense Flournoy Has The Right Idea On Defense Spending

In today’s Wall Street Journal, Michelle Flournoy, former Under Secretary of Defense and once rumored to be a candidate for the top slot at the Department of Defense, makes a strong case for fundamentally changing the way the government extracts savings from the defense budget. Flournoy points out that the United Sates has an “abysmal record” of managing post-war drawdowns. The usual result is a hollow force. She ought to know, having first been in the Pentagon during the Clinton Administration, a period when that is exactly what happened.

The U.S. military is already well on its way to hollowness. Despite record high defense budgets over the past ten years supplemented by other contingency operations funding, today’s military is not in good shape. Its equipment inventory overall is older and more expensive to maintain than it was ten years ago. The wear and tear on people, equipment and facilities as a result of ten years of war has been enormous. Much of what was acquired for the wars in Iraq and Afghanistan may not be relevant to the conflicts of the future. Tens of billions of dollars of equipment is either being mothballed, handed over to our allies or even destroyed overseas. The Pentagon is saddled with excess infrastructure, much of it badly in need of maintenance and upgrading. In a letter to the Chairman of the Senate Armed Services Committee, the Joint Chiefs of Staff warned that “the readiness of our force is at a tipping point.”

Flournoy proposes that in this drawdown we do the smart thing. This means preserving real military capabilities while extracting savings from other parts of the defense enterprise. The Under Secretary targets four areas: Pentagon overhead, Tricare, infrastructure and the acquisition system. In three of these areas she is on firm ground and has sensible, even bold proposals. Cutting back on the number of government employees and contractors working for the defense department would provide instant savings. Controlling growth in the cost of military health care is also straightforward. Simply limiting the right of retirees who work for private companies that provide health care from cost shifting by using the Tricare system instead, would save billions. There is no question that the military is burdened with an excess of infrastructure that must be reduced. Flournoy’s proposal for another Base Realignment and Closure Commission round this year, while politically sensitive, is dead on.

It is on the subject of acquisition reform that Flournoy is the weakest. Unlike the other three topics, here she provides only generalities, praising the efforts of her former compatriots to implement reforms under the heading of Better Buying Power but saying that more needs to be done. In fact, some of the initiatives pursued under Better Buying Power such as the mania for competition have probably increased acquisition costs. Given that Flournoy is willing to take on three sensitive issues in the defense budget — civilian workforce, military health care and base closure — a more focused proposal to reform the acquisition system would have been welcome.

The defense acquisition system is weighed down by unique, archaic, arcane and expensive rules, regulations and procedures. Taken together they add between 18 and 35 percent to the average cost of goods and services compared with the same products and activities in the private sector. So how about this idea: zero-base all acquisition regulations and technical specifications? The head of the Defense Business Board was recently quoted as saying if it were up to him he would set a match to the entire set of acquisition regulations and start over. Mandating the use of performance-based logistics in maintenance and sustainment contracts would be another bold step. A third bold recommendation would be to expand the use of block buys and even advanced procurements for major, complex weapons systems.

Flournoy ends her editorial with a dire warning: “either the government cuts costs by fundamentally transforming how DoD does business, or the U.S. risks cutting capabilities critical to national security and global leadership.” All I can say to this is amen.