WASHINGTON — The Defense Business Board is recommending that the next presidential administration run the Pentagon more like a business and turn the deputy defense secretary into a cost-cutting, efficiency-hunting chief management officer.

The board, a DoD advisory committee comprised of private-sector executives, says the role should focus more on reining in overhead and less on substituting for the defense secretary. The board made the recommendation in a recent, 112-page report on the presidential transition, which comes as Congress and the Pentagon are pursuing their own agendas for DoD reform.

"In the past, it has been quite normal for the Deputy to spend significant time away from the Pentagon, either 'filling in' for the Secretary or on matters requiring coordination with other agencies, international partners, or the White House," DBB chair Michael Bayer said in a letter accompanying the report. "The adverse consequence of this has been an insufficient attention to the important primary function of managing the Department. The management challenges of this, the largest institution on the planet, require the full-time attention of a Chief Management Officer."

The Defense Department is the nation's largest enterprise, and if its expenditures were gross national product it would be the seventeenth largest nation, the report notes. It is the nation's largest employer, with more than 1.3 million people on active duty, more than 700,000 civilian personnel and roughly 600,000 contractors. Another 1.1 million serve in the National Guard and Reserve forces, and about 2 million military retirees and their family members receive earned benefits.


The current deputy defense secretary, Bob Work, has championed a vision for a Defense Department that is more technologically agile and globally engaged, and spearheaded its so-called "Third Offset Strategy." Work also has called for cost cutting, and, pointing to estimates that the department has 22 percent more in installations and real estate than it needs, urged lawmakers to consider a new round of the politically unpopular base-closure process.

As envisioned by the advisory board, the deputy defense secretary would take bold action to tame the costs associated with overhead, personnel, benefits and unnecessary work, all of which Bayer considers necessary for DoD to "swiftly and shrewdly adapt to maintain its superiority over determined adversaries."

"Without major surgery, our overhead and personnel costs will continue to eat away at our modernization and readiness," Bayer's letter reads. "This is not about policy; it is about running the Department like a modern business."

The report argues DoD must look closely at off-limits budget areas like intelligence, classified programs and their overhead, the combatant commands and the armed services, and bring in specialized expertise to lead a re-structuring review of the Pentagon. This would ultimately cut entire organizations, activities and contracts, as opposed to picking around the edges of the budget.

Email:  jgould@defensenews.com 

Twitter:  @ReporterJoe