The U.S. Military’s Greatest Enemy: DoD Overhead

My colleague Loren Thompson is fond of pointing out that the most serious problem facing the U.S. military today and the primary reason it is so difficult to make a compelling case for robust defense spending is that the country lacks an enemy. The President’s speech last week during which he declared that the war on terror had to end underscores this point. Every time America has concluded a war, be it the Civil War, two world wars, Korea, Vietnam, the Cold War and, now, the war on terror, defense spending has declined and America’s military has shrunk and even allowed to go hollow. No enemy means no need to spend money on defense.

This time, however, is different. I must respectfully disagree with Dr. Thompson. There is an enemy. It is not America’s enemy but it is the enemy of the country’s military. It is the Department of Defense’s overhead functions and acquisition system. The reason for this is that in the environment of sequestration the ability of the services to maintain essential force structure and vital capability is absolutely dependent on reducing the overhead costs associated with the Pentagon. According to the Defense Business Board, about a quarter of a million people — civilian, uniform personnel and contractors — now work in the Office of Secretary of Defense, Defense Agencies and Combatant Commands at an estimated price tag of no less than $116 billion. It may be even higher; the Department of Defense doesn’t have an accurate count of how many people work in the “back offices.” Nor do they have a clue as to the total cost burden of a civilian employee, something which every defense contractor knows down to the penny since they have to report this number to the department.

Under the Obama Administration, the size of the Pentagon’s “back office” is estimated to have grown by some 100,000. In addition, one study estimates that there are some 350,000 uniformed personnel, the most expensive human capital the department has, doing jobs that could readily be filled by government civilians or even contractors, both of whom are much cheaper.

Every major review of the way DoD does business reaching all the way back to the Eisenhower Administration has emphasized the importance of streamlining processes, reducing overhead, employing modern management techniques and programs, reforming the acquisition system and reducing regulations. For decades Pentagon leaders have failed to implement the recommendations of these studies or, having begun to make changes, have allowed the system to backslide. Former Secretary of Defense Robert Gates tried to find $100 billion in savings by reducing overhead, including by shutting down Joint Forces Command. Unfortunately, since most of the personnel slots in the command were merely transferred to other parts of the Pentagon, the savings were minimal. Over and over again, DoD has announced a reform effort only to fail to achieve the desired results.

The current acquisition reform effort, known as Better Buying Power (BBP), is another example of this kind of insanity: doing the same thing over and over, expecting a different result. By imposing new behaviors, additional reporting requirements, and increased oversight of acquisition activities, BBP generally has increased costs to both private companies and government. For someone who prides himself on being data driven, Under Secretary of Defense Frank Kendall, needs to do the simple math. More activities, reports, audits and personnel mean higher costs.

Big business routinely responds to down markets by reducing overhead, streamlining their processes and making better utilization of human capital. Only government would do the opposite and increase its overhead costs when money gets tight.

Recently, four prominent think tanks went public with their proposals for how DoD should reduce the military in response to sequestration. While they all recommended reducing the size of the Pentagon’s civilian work force and cutting military pay and benefits, at least three of them also proposed substantial cuts in U.S. military capabilities. None took aim squarely at the military’s greatest enemy: DoD’s overhead and broken acquisition system. Maybe that was too hard.

The reality is there is more than enough excess in the Pentagon’s “back office” operations, unnecessary regulations, oversight and behaviors in the acquisition system to cover the entire bill for sequestration. Before we cut a single warfighter, airplane, tank or ship, we need to wring the unnecessary costs out of the system.