WASHINGTON — The year-end ritual across the Defense Department is "use it or lose it," with employees racing to spend every last dollar on office equipment and information technology, hoping to save their budgets from next year's axe.
But there's a better way, according to former Defense Department Comptroller Bob Hale. Hale, a BoozAllen fellow, has a list of cost-saving recommendations in a 15-page report published by the Center for a New American Security this week.
To curb hurried spending at the end of the fiscal year, which often accounts for lower-quality contracts, the new administration would instead allow small amounts to carry over into the next year. One federal agency with carry-over authority, the Justice Department, experienced significantly smaller spending spikes as the fiscal year, which ends Sept. 30, draws to a close.
Even more important, Hale argues, is for the Trump administration to reach a broad budget deal that raises spending caps and enables a reset of DoD's budgeting. Failure to raise the statutory budget caps will lead to more money-wasting chaos and leave DoD unable to finance the sharp growth in spending on new weapons systems expected in the 2020s.
"Clearly, a broad deal will be possible only if the new president makes it a priority," Hale said. "Because of its critical importance to DoD's mission success, not to mention success with business reforms, the new secretary of defense should urge the president to pursue a budget deal and should do everything possible to support the president's efforts."
Former Pentagon comptroller Robert Hale testifies in a 2013 Senate hearing.
Photo Credit: DoD
The recommendations include the military cutting excess infrastructure, unpopular for its economic impact and therefore likely to require the next defense secretary to persuade Congress. Congress rejected President Obama's requests for a base-realignment and closure process, but might accept one if upfront costs are capped.
The report does not recommend the gas pedal in all areas. Given the raft of acquisition reforms due to be implemented, Hale recommends the next administration focus on implementation and consider few additional reforms.
But, despite the years it has taken to get the Defense Department audit-ready, the next administration needs to keep trying, Hale said. Getting there will require changes in systems, especially logistics systems, but the payoff is that auditability "will reassure taxpayers that DoD is a good steward of their dollars," Hale said.
DoD should take a second look at operating and support costs that make up two-thirds of its budget and ballooned even as personnel have shrunk. Weapons buyers should pay more attention to the costs of O&S costs, and Congress ought to both hold hearings on it and mandate incentives to consider tradeoffs between O&S costs and capability early in the life cycle of weapon programs.
DoD should refrain from using expensive contractors to satisfy political pressure to reduce civilians, and Congress ought to relax demands to reduce the federal civilian workforce. A recent Congressional Budget Office study found that shifting 80,000 positions from military to civilian personnel, and eliminating the military positions, could save the federal government $3.1 billion to $5.7 billion a year once fully implemented.