WASHINGTON — The Pentagon’s fiscal year 2020 budget request will feature a special section focused entirely on investments that will drive reforms and save taxpayers money long-term, according to the number three official at the department.

“For the first time in the department’s history there will be a formal reform budget within the budget book. And we currently have more than 50 reform initiatives that will be reflected,” Lisa Hershman, the department’s acting chief management officer, told Defense News in a Feb. 5 interview.

“We’re actually giving a nod specifically to numbers allocated for reform. Let’s keep in mind, some of these, to make these big changes, might include some investment, but there’ll also be savings,” she added. “So you’ll see that directly tied to reform initiatives."

Those 50 initiatives cut across OSD, fourth estate and military departments. Asked whether those figures would include figures showing how much money the investments would return long-term, Hershman demurred to go into details, but said “You will see specific numbers.”

Mark Cancian, a retired Marine Corps colonel who is now senior adviser with the Center for Strategic and International Studies International, is cautiously optimistic about the plan.

“Let's see what the management reforms actually look like. They may be worthwhile, but it doesn't sound like they're saving a lot of money, which was a key part of the budget strategy,” he said.

A major part of the CMO’s charge has been to find wasted money inside the Pentagon that can be redirected towards warfighter needs. Across the tail end of FY17, plus the entirety of FY18, the CMO’s office found $4.7 billion in validated savings.

That number could increase slightly, Hershman said, as her office figures out how to handle the various working capital funds around the department and some of the savings found within.

The savings come from many different places, but largely fall into two buckets — changing regulations and statutes, and streamlining procurement. On the process side, Hershman said a team within CMO reviewed 716 regulations and recommended repealing that 249 of them would save approximately $25 million.

On the procurement side, look less at major defense acquisitions and more at the day-to-day expenses that crop up as a result of the Pentagon bureaucracy. Hershman pointed to one case where an individual running operations for the National Capital Region took a look at regional electricity bills and realized the department has 15 different accounts.

The individual negotiated for a two percent discount from the remaining companies on the basis of the fact the Pentagon was a prompt payer. The savings: $300,000 annually.

That’s small change by Pentagon standards, but it adds up. And Hershman points to that case as an example where someone in the system decided to take reform to heart and find savings without needing a top-down order.

Updated 2/8/19 5:10 PM EST to clarify how the Pentagon handled the electricity bill situation.

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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