Enlarge / This slide deck got pulled from the Defense Business Board website after DOD leaders allegedly moved to suppress the data behind it.reader comments 109
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In January of 2015, as the US Department of Defense was chafing under the sequestration of its budget, the Pentagon leadership got some great news.
A study prepared by the Defense Business Board (DBB) and a team from the global management consulting giant McKinsey and Company found that even with “moderate” changes to business practices, the DOD could save $125 billion over five years.
That would be enough to fully fund operations for 50 Army brigades, 10 Navy carrier strike group deployments, or 83 wings of F-35 fighter aircraft (one wing being about 36 aircraft—purchase price not included) for each of those five years.
And all that savings could be had simply by fixing the military’s bureaucratic back-office, according to the study—a force of more than one million uniformed government, civilian, and contractor employees.
DOD’s bureaucratic force is now almost as large as the military’s active duty force itself, which stands at 1.3 million soldiers, sailors, Marines, and airmen.
That good news, however, did not fall upon welcoming ears.
DOD officials had no real idea how much bureaucratic overhead was costing them, as the costs were never accurately measured. When they saw the numbers from the DBB, the Washington Post reports, some of the Pentagon’s leadership was afraid of a legislative backlash.
After DOD officials had complained for years about not having enough money to Congress, the department feared findings would trigger further cuts to the DOD’s budget.
So the data for the study was designated as sensitive, and an overview of the report that had already been published to the Defense Business Board website was pulled.
Over half of the DOD’s budget is spent on human resources management, health management, financial management, logistics, acquisition and procurement programs, and managing the Defense Department’s vast real estate holdings. Most of the savings projected by the DBB would come from boosting productivity in these areas by four percent—and by pushing government employees to retire early or by renegotiating contracts.
The executive summary of the DBB’s study: $125 billion could be saved, or more if the DOD acted immediately.
There are nearly as many people in DOD support roles as there are uniformed service members on active duty.
Big savings to be had in workforce cuts…
And up to $150 billion from overall productivity gains over five years.
That’s not how we do things here
A small chunk of the savings—$5 to $9 billion—would come from making DOD’s IT systems more efficient. Part of the problem identified with DOD’s IT by the DBB was “insufficient [funds] dedicated to modernizing and automating the business processes.” In total, 20 percent of DOD’s IT spending is on development and modernization, while 80 percent is spent on operations and maintenance of existing systems.
That ratio won’t surprise many in government IT—it’s actually more for modernization than many agencies budget.
By consolidating DOD business IT, DBB said the Pentagon could net $5 to $9 billion over 5 years.
But their recommendations on shared services mirror some of the things DOD has already tried.
Moving to get rid of paper would require changes to laws and regulations—including how DOD prints things.
The DBB recommended that DOD move to establish an IT shared services organization within DOD and embrace cloud and cross-DOD sharing of big data analytics among other things.
But DOD already has an IT shared service organization—the Defense Information Systems Agency—which has struggled to get the military to embrace its cloud computing services.
Some shared services have already happened: DISA got the Army to take point on adopting a DISA-hosted common enterprise e-mail system, but that effort took years to roll out to the Army.
The Air Force, Navy, and Marines have adopted the system on a much smaller scale for a variety of reasons.
Scaling those sorts of IT consolidation efforts up to things like enterprise resource planning (ERP) systems and other major business systems may not be as painful as e-mail migration, but squeezing savings of $5 billion to $9 billion over five years would be hard sailing based on previous DOD efforts to consolidate or outsource networks.
The rest of the savings projections DBB cited in the study may also have been a shade or two overly optimistic, as they were based on changes that would have likely required tweaking legislation and regulations governing nearly every aspect of the DOD’s operations.
That’s precisely the defense that Deputy Defense Secretary Robert O. Work, who ordered the study, gave for shelving the report. He told the Post that the projected savings were unrealistic because the DBB failed to understand the impact of federal civil service laws, the difficulty of renegotiating federal contracts, and the desire of members of Congress to have Defense jobs in their district.
“There is this meme that we’re some bloated, giant organization,” he told the Post‘s Craig Whitlock and Bob Woodward. “Although there is a little bit of truth in that…
I think it vastly overstates what’s really going on.”
Work added that some of the recommendations have been incorporated into DOD plans to save $30 billion by 2020.
But more automatic budget cuts are coming under sequestration—$113 billion over the next four years, unless a Trump administration reaches an agreement with Congress.