An influential Pentagon advisory board is poised to recommend Defense Secretary Robert Gates close contractor-heavy U.S. Joint Forces Command (JFCOM) and rid his office and the Joint Staff of redundant functions, moves that could save billions of dollars.
As part of work ordered by Gates under his war on overhead and inefficiencies, a Defense Business Board study group is urging him to also shutter its Networks and Information Integration directorate. NII, as it's known in the defense community, resides within the Office of the Secretary of Defense (OSD).
The Defense Business Board task force also is recommending Gates initiate a hiring freeze for OSD, all Joint Staff directorates and all combatant commands.
Those recommendations are part of a set of preliminary recommendations the board unanimously approved July 22. The board expects to submit these initial findings to Gates soon in an informational memo, followed in October by a broader set of longer-term cost-cutting proposals.
The board also will advise Gates to seek to "eliminate organizational duplication and overlap" across the department. A fourth proposal will advise an immediately effective directive to "seriously curtail all indirect spending" on things like "duty station moves, travel [and] conferences," states the preliminary DBB report. This recommendation also calls for Gates to modify the so-called "use it or lose it policy" on such funds, "which only promotes wastes," the report states.
The JFCOM and NII closures are part of a broader recommendation that will go to the secretary soon to shrink the military's combatant commands, which the board has concluded are swollen with thousands of expensive contractors - many in redundant positions.
Gates asked the board to propose ways the department can slash $101 billion over five years from overhead and unneeded costs. Gates wants to transfer those savings to hardware programs he feels are needed to combat future threats.
With war funding included, U.S. military spending for fiscal 2010 will approach $661 billion. The DBB study group estimates "at least $200 billion - $ 1 trillion across the [future years defense plan] - is overhead." If the Defense Department's overhead was its own nation, it would rank 49th globally in total gross domestic product - just behind Singapore and Portugal, and just ahead of Israel and the United Arab Emirates.
The Business Board has for about a year predicted major turbulence ahead for the U.S. defense budget as several forces finally converge: federal deficit reduction efforts, the economic slowdown, ever-escalating DoD healthcare and personnel costs, and the end of two wars. The board estimates the interest Washington will pay on the federal debt will exceed the annual defense budget by 2017.
Board members believe that to avoid fiscal calamity, the Pentagon will have to find savings beyond Gates' $101 billion target.
The preliminary report the advisory board approved made it clear the Pentagon must get a range of personnel and organizational costs under control if it wants to avoid killing more major weapon programs.
"Many combatant commands are staff- and contractor-heavy and very expensive," states the preliminary DBB report.
The DBB study group found Joint Forces Command is made up of more contractors than DoD uniformed or civilian employees. The number of government workers is around 3,000, while hundreds more contractors work at its various subcommands.
A chart in the study group's presentation shows 14 JFCOM subcommands and organizations.
"What the heck is all this stuff?" Arnold Punaro, a DBB senior fellow who led the study, asked of those organizations. Many appear to have redundant missions, he said.
The DBB group found 10 U.S. commands are populated by almost 11,000 contracted workers:
å U.S. Central Command has nearly 2,000 (versus slightly more government employees).
å U.S. Transportation Command is the only other command with more contractors than government employees (around 1,500 versus around 1,000).
å U.S. Pacific, Special Operations, European, African, Southern and Strategic commands employ significantly more government employees, though the number of contracted workers at the Pacific and Strategic organizations tops 1,000.
That comes with a $16.5 billion price tag in fiscal 2010, DBB concluded.
"Are some of the combatant commands becoming 'contractor' commands?" asks one DBB study team chart.
The DBB study team urges Pentagon officials to find a way to track the number of contractors and their costs. It also proposes determining "how precisely many people the department has on the contractor payroll and assess their functions as core or non-core," Punaro said during a July 22 meeting.
The study group also will advise Gates to either return the size of the DoD civilian work force to 2003 levels or shrink it by 15 percent - "whichever is greater."
On eliminating redundant organizations and jobs, the DBB advises Gates first to look around the halls of the Pentagon.
"Focus first in areas such as OSD and the Joint Staff in shared areas such as public affairs, legislative affairs and personnel oversights," Punaro said. Within the Pentagon's legislative affairs shop, "there are hundreds of people," but the office's director, Elizabeth King, "can't find them all," said Punaro, a retired Marine Corps general and former senior SAIC executive. "And they sure don't work for her."
Punaro also said Gates should examine redundancies in similar organizations. Two examples: the Joint Staff's force structure, resources and assessment directorate (J-8) and the Cost Assessment and Program Evaluation; and the Joint Readiness Oversight Council and the office of the undersecretary of acquisition, technology and logistics (AT&L).
Gates has won general acclaim around Washington for his program to free up the $101 billion and use the savings to avoid further weapons program terminations. Several board members echoed that.
Dov Zakheim, a former Pentagon comptroller and now a Booz Allen Hamilton executive, applauded the secretary for being "brave enough" to seek overhead and other cost reductions. Gates realizes that he must make changes, even with two hot wars raging, "because if we don't, we'll shoot ourselves in the foot," Zakheim said.
Punaro hailed Gates as a "bureaucracy buster."
Yet, since 2006, the number of contractors in the Office of the Secretary of Defense has skyrocketed. Gates was sworn in Dec. 18, 2006.
In 2006, DBB found 2,106 contractors populated OSD; by fiscal 2010, that number had grown to 2,708. And it likely will climb even higher since the Pentagon is looking to move some contracted positions to the government payroll. (Punaro said information on intelligence positions was not available; that data would likely drive these figures yet higher.)
When DoD uniformed and civilian personnel who work within OSD are added, it becomes one of the largest enterprises - personnel-wise - in the U.S. military. Punaro said OSD's total expenditures are around $5.5 billion annually, and are projected to grow to $6.5 billion in five years.