WASHINGTON — Language in the proposed fiscal 2021 National Defense Authorization Act eliminates the Pentagon’s Chief Management Officer job, a move that the woman who has held the job said will harm taxpayers and military readiness.
“It’s hard to understand how the most successful reform effort in history is essentially being eliminated,” Lisa Hershman, the Pentagon’s CMO, told Defense News shortly after the NDAA language was released Thursday. “It’s disappointing. I’m not exactly sure what or who [defense committee leaders] were listening to.”
Representatives from the House and Senate Armed Services Committees agreed to a conference report of the NDAA this week, with a vote likely to come next week. Despite a veto threat from President Donald Trump, the NDAA is expected to pass comfortably in both chambers.
That means Congress has all-but-decided to eliminate the CMO’s office, roughly four years after lawmakers created the role and made it third-in-line at the department, with the goal of having a single point person for reform efforts inside the world’s largest bureaucracy.
Members have said the office has not moved fast enough to deliver reforms, with Rep. Mac Thornberry, the retiring top Republican on the House Armed Services Committee, saying in June that “Congress is largely responsible for making this an impossible job, and we need to figure out something different.”
“We are starting to see some real payoff from what [reform legislation] we’ve done in recent years. No they’re not moving fast enough. No, it’s not enough,” Thornberry said then, of DoD reform efforts writ large. “We’re trying to hold their feet to the fire on some of the things we’ve already told them to do in recent years.”
Instead, the CMO’s office will be dismantled no later than one year after the passage of the NDAA, with all duties and responsibilities dispersed among different officials as directed by the Secretary of Defense. In addition, the secretary must submit a report to Congress including “any legislative proposals necessary to effectuate the changes to law made by this section. "
The office experienced turbulence from the start, with the first confirmed CMO, Jay Gibson, was forced out of office after just nine months. He was replaced by Hershman, the deputy CMO, who served as acting CMO for over a year before receiving a confirmation vote herself.
On Thursday, Hershman was careful to note that a bipartisan group of lawmakers had backed the CMO’s office, but expressed frustration with how the process ultimately ended up.
“It’s really hard to understand their justification,” she said. “Every dollar saved through reform went to the warfighter directly. Every dime of what we saved made them safer and more lethal. This was a big win for the taxpayers, freeing up $37 billion of budgeted funds through reform and increased efficiency.”
“Congress has given no justification for eliminating the CMO. Since 2018 when the role was created we have validated $37 billion in savings, eliminated hundreds of unnecessary regulations, and created the first unified Fourth Estate budget in history.
“Despite all that success, I’ve never been asked to testify — on the accomplishments, visions, next steps, none of it. I’ve never been asked by either the House or the Senate, any subcommittee to make any kind of testimony on the facts. They need to answer to this.”
In November, Hershman spoke with Defense News about the savings claimed by her office, as well as a recent report by the Government Accounting Office (GAO), a government watchdog, that concluded the Pentagon had achieved $37 billion in savings since the start of FY17.
Not all of that is directly the result of the CMO’s office; in addition, the Nov. 5 GAO report raised concerns that the figures “were not always well documented or consistent with the department’s definitions of reform,” and may have some overstating in savings, the oversight agency largely supported the claim that $37 billion had been saved, and re-applied to defense priorities, during the reform process.
But Hershman pointed to that finding as a victory lap for her team, with $7.7 billion found in FY20 and $12.1 billion found in FY21.
“To have an independent body such as GAO actually put their stamp on those savings, and also acknowledge the great trajectory that we’re on with continued improvement — we’re doing something right,” she said in November, noting that the savings found by her office in a few years has already lapped what was found by the history of the deputy CMO office that proceeded the CMO’s creation.
More savings are expected to result in the upcoming budget as well, thanks to a new set of authorities given to the CMO’s office at the start of the year when then-Secretary of Defense Mark Esper put Hershman in charge of assembling the budgets for the so-called “Fourth Estate” — the various Pentagon offices that do not fall under a military service branch. In essence, the CMO team now would act as a service secretary for budgetary purposes over those offices.
Hershman was given a target by Esper of finding $5 billion in savings over the next five years. That’s a number she says her office is on track to break, significantly, with an estimated $6.205 billion total in savings found in just the FY22 budget effort.
Perhaps most notably, she said, $4.9 billion of that came from actual reforms, while the rest was the result of cuts or clean sheet improvements; in other words, the money wasn’t primarily found by cutting people or technology, but by making substantive changes, with roughly $77 million in investments to achieve that return.
In one case, she said, there was a spare parts contract that was expected to cost about $80 million but better inventory management inside the department due to reforms meant planners found they had plenty of equipment as is, and reduced that buy to under $30 million.
In another case, an IT service contract was set to a highest level of service, which wasn’t actually needed; that contract, which cost around $217 million annually, was reduced by $67 million for the current fiscal year.
“One of the things that we’ve been trying to do, from a cultural standpoint, is get away from across the board cuts. Those are detrimental, and it lends itself to a process that drives bad behaviors,” she said in November. While noting that occasionally cutting a program is appropriate, on the whole, Hershman argued “You can’t cut your way to prosperity.”
Now, with the short history of the CMO’s office apparently coming to an end, Hershman insists she isn’t bitter about the offices’ fate.
“I came from the private sector. I’m happy to go back to the private sector,” she said Thursday. “I’m worried about the warfighter and taxpayers. Things aren’t getting easier in either of those camps, money is tight and we have to be prudent with how we spend ... [We are] in just the beginning stages of adoption but has already proven itself out to be working. It’s just a shame that we won’t be able to scale it.”
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.