WASHINGTON ― A frequent refrain from U.S. Defense Secretary Jim Mattis is the need to reform the internal workings of the Pentagon to find efficiencies that can be reinvested toward war-fighting capabilities. Helping to guide that project is John H. “Jay” Gibson II, the Pentagon’s first-ever chief management officer.
In his first interview since taking office, Gibson ― a former U.S. Air Force financial official who has spent significant time in industry ― laid out his plan for tackling the traditionally thorny issue of internal management reforms.
We hear so often that the Pentagon bureaucracy resists change. You’ve essentially been in place for six months. Have you felt that resistance?
It doesn’t really matter whether it’s the government or whether it’s a large corporate entity ― any time you look at change, you’re going to see a bit of hesitation, bit of resistance. I mean, we’re all human beings. Change is something that we are always a bit hesitant about. So I wouldn’t characterize it that really here is anymore unique than industry. I think that we’re addressing that heads up. We’re getting the buy-in.
The other thing I’d say that’s perhaps different now in addition to the support from the leadership in alignment is, historically, many times we’ve tried to find efficiencies has been because there’s been a budget cut. The process we have the benefit of now, thanks to both the Congress and the leadership, is that the services and the department has a good feel of what’s available to it over the next period of time. So we can start planning and instituting this type of behavior on a very rational, thoughtful process. That gives it the best opportunity for success.
You have nine priority areas: information technology, human resources, community services, contracts, real property, testing and evaluation, medical services, logistics and supply, and financial management. How do you prioritize or balance out those areas? What were your first steps?
We said: “All right, let’s take what we know are corporate or common type of services that we can benchmark against the private sector and say, ‘We know there’s opportunity here to find efficiencies and optimization.’ “ Then now that we’ve got [those areas], then you can say: “Let’s take people that are subject matter experts from the enterprise, have them lead the team and then populate the team with stakeholders.” Let them go out and say: “I see these opportunities. I know this world. Let me pick projects that I think that we can see benefit from still aligning to the common goal of creating efficiencies enterprisewide.” Then that’s vetted through a governance structure, which is the Reform Management Group. That also includes stakeholders at a higher level.
So there’s a feedback loop there. We want you to be aware of what we’re going to do, so that way you’re buying in. Then we’re going to come back and report to you to let you know how we’re doing. Then the final piece is the reward cycle, and that’s why it’s different. In this year we can tell you that we found this amount of savings. Now Army, this belongs to you. Air Force, this belongs to you. The reward cycle is incredibly valuable. That goes back to why it’s perhaps a little bit different this time.
Can you throw out an example of a project where you’re seeing this reward cycle funnel back to the services?
Sure, this one just came up and it’s great. In the medical world, we’re contracting for professional services across each of the services, independent contracts. [Now] we can simply say: “Look, we found the best contract. Let’s go to that one, everyone.” I know it’s a simple concept, but we can start to phase that in. Just in the early stage this next year, we’ll save about $20 million [per year] and then $75 million [per] when we’ve reached full-run rate in a couple years. If you look at just in year one, that’s about 400 flight hours of an F-35A. At run rate, that’s about 1,500 hours. It supports lethality. That brings those resources back to the services to use.
Is there a figure you’re aiming for, in terms of savings, over the next five years?
We have a baseline, which is the Office of Management and Budget targets that they are expecting of us, and that begins with $6 billion in ’19 and goes through $46 billion over the Future Years Defense Program. So that’s in the aggregate. We use that as a baseline. But the way we’re looking at this is, organically, we’re bringing up these projects. They have a readiness and a financial benefit. We’re tracking those, and then we’re measuring those. We’re constantly refining it. Then we begin to track those. Ultimately, this will translate to how we return those resources because the accounting has to all stack up. We used to spend $100 on something; now we are spending $72. That’s $18 per month in savings, but we have to validate that, make sure it’s real, be consistent and then say: “OK, at some point, potentially in the year of execution, we want to reprogram those funds back to wherever.”
I would tell you that we’re very sensitive because part of our changing of a culture here is leaning forward. We’re willing to what I’d say: flight, test, fly. So instead of trying to analyze forever for perfect, we’re saying everybody thinks it’s a good idea, let’s go ahead and begin phase one of this. Let’s go. Let’s go. Then we’ll refine our numbers and get more fidelity. [For] a good idea, we’re willing to accept some risk of implementation of a good idea. Any time you go out after a reform or a change effort in any organization, part of the component of success is establishing the ability of the credibility of what you’re doing. Get some quick wins. Say: “That process works.” Then you can continue to grow it from there.
One thing I don’t want to overlook is we’re looking for operational efficiencies. Sometimes that simply yields financial benefit. Sometimes that yields what I’ll call an operational readiness benefit, but not financial. But it’s still good and still incredibly important. If we’re able to simplify the process, reduce the number of man hours, sometimes that’s hard to quantify, but there is still a tremendous benefit to readiness. Then sometimes we find the projects that have a nice blend of both. So it’s not just money.
How confident are you that your office can help get to those OMB-targeted savings levels?
We’re very comfortable. We’re probably going to pleasantly surprise people. I’m not going to start throwing out numbers yet. But I think this is a complement to the teams we have, as well as everybody else that’s involved in this process. They say: “We’re in, we’re willing, we’re willing to give this a shot.” I think, again, that starts at the top. The fact that the secretary is willing to make this a priority and he lives it every day ― that’s just invaluable.
House Armed Services Committee Chariman Rep. Mac Thornberry has put forth a plan that would involve large cuts to the civilian workforce, including eliminating seven offices. Is that something you support?
In general, I would say that we’re aligned with the spirit of where he’s going. Because if we’re going to reform the business, you can’t cherry pick what part of the business you’re going to look at. You’re going to get the most value and the most synergies from true enterprisewide reform. Let’s look horizontally and make sure we’re not duplicating efforts where we could consolidate those and make a center of excellence and leverage it across the enterprise. So in the spirit of where the chairman’s going, I’d say we’re totally aligned. Once it comes out and we look at the details, we can probably get into that more. But at the high level, I think we support it. That’s aggressive. But I think that we’re going to start with doing this right. Given how we operate, I think there’s significant opportunity. What the number ends up being, I think we’ll know more as we get into it. But again, we’re aligned with the spirit of where he’s going with this.
What would you say to a workforce who might be nervous about such cuts?
Part of what makes up the cost is people. But our goal is we need to operate this business in the most efficient and effective manner. Those resources going back to make us the most lethal we can be [for] our men and women in uniform. The other is to be the best stewards of the taxpayer money. Any time you take on projects of this nature, you may have those situations where you have to rearrange the resources. But we’re going to do what’s best on behalf of the taxpayer and the department.
Along those lines, are you on track for the congressionally mandated 25 percent headquarters reduction?
I think we’re on target and trajectory. That’s one of the things I think that we would want to balance with anything that comes out of the upcoming bill, whatever the end result would be, to make sure that there’s potentially no disruption between the two. But I think that’s very doable because at the end of the day, the ultimate goal is the best and most efficient operation to the enterprise. I think the Congress will work with us whatever that may end up being.