Gates announces major cuts at Defense

This story has been updated.

Defense Secretary Robert Gates on Monday said the department would cut funding for contractors, freeze hiring for all but critical jobs, eliminate three major organizations and propose cutting at least 150 senior executive service positions and 50 general and flag officer positions during the next two years as part of a wide-ranging effort to reduce duplication and overhead in military organizations.

"This agenda is not about cutting the department's budget," Gates said at a Pentagon press briefing on Monday. "It's about reforming and reshaping priorities to ensure that, in tough budgetary and economic times, we can focus defense resources where they belong: in America's fighting forces, investment in future capabilities and, most important, on our men and women in uniform."

Sustaining the current force structure and investing in necessary equipment and weapons will require 2 percent to 3 percent real budget growth, Pentagon officials estimate, yet the department is forecasted to receive only 1 percent real growth in coming years. To avoid cutting military capabilities, Gates called in June for an "unsparing" look at how the department is staffed, organized and operated with the goal of significantly reducing excess overhead costs and applying the savings to force structure and modernization.

Specifically, Gates has tasked the military services with finding $100 billion in overhead savings during the next five years. The services will be able to keep the savings they generate and reinvest the money in warfighting and modernization programs.

He said Monday he also has authorized each military department to consider consolidating or closing bases and facilities where they see fit.

"This is obviously a politically fraught topic," Gates acknowledged, noting that Congress has placed limits on the department's ability to close installations. "But hard is not impossible, and I hope Congress will work with us to reduce unnecessary costs in this part of the Defense enterprise," he said.

Instead of waiting for the normal budgeting process to implement changes in the future, Gates said he had determined there were several things his office could do now to start a process he said he hoped would "instill a culture of savings and restraint across the department." Among other things, the Pentagon will:

  • Freeze the number of civilian senior executive, general and flag officer positions, as well as political appointments requiring Senate confirmation, at 2010 levels. A senior task force will assess the number and locations of senior positions and recommend cuts by Nov. 1. At a minimum, Gates wants to eliminate 50 general and flag officer positions and 150 senior executive service positions during the next two years -- a 50 percent reduction in the total growth of those billets since 2000.
  • Cut funding for service support contractors 10 percent annually for each of the next three years. Last year, Defense said it would reduce the number of service support contractors by 33,000 by 2015, but Gates said he was not satisfied with the progress so far; thus, funding will be reduced to accelerate the cuts.
  • Freeze the number of positions in the Office of the Defense Secretary, Defense agencies and combatant commands. Missions and staff in those organizations expanded after Sept. 11, 2001, with no commensurate decrease in less-important activities. To force organizations to make necessary tradeoffs, no more full-time positions will be created except for planned increases in critical areas, such as the acquisition workforce.

"These measures are just the first step of a comprehensive re-baselining of OSD, Defense agency and [combatant command] staffing and organizations," Gates said. In addition, he ordered a "clean sheet review" be completed by Nov. 15 outlining the responsibilities, locations and ranks of people performing the department's most critical priorities.

The Pentagon needs to create "a system of fewer, flatter, and more agile and responsive structures, where reductions in rank at the top create a virtuous cascading effect downward and outward," Gates said.

In addition, too many parts of Defense, particularly those involved in information technology, cling to separate infrastructure and processes, Gates said. Every base and operational headquarters and Defense agency has its own IT organization, processes and application-ware, resulting in a patchwork of capabilities that creates vulnerabilities and stymies productivity.

To address the proliferation of IT bureaucracies, Gates said he was directing an effort to consolidate all information technology assets to create significant economies of scale.

One issue Gates is tackling that likely will appeal to department staff is the number of oversight reports required of various organizations. "The department is awash in taskings for reports and studies," he said, noting that nearly 1,000 contractors are involved in producing more than 700 annual reports. He ordered a freeze on the number of required reports along with a 25 percent decrease in money allocated to advisory studies. In addition, every report must include a statement of its preparation costs.

By Oct. 1, the department would complete a review of all oversight report requirements and reduce the volume of those that aren't congressionally-mandated. Likewise, the department is reviewing the 65 outside boards and commissions that oversee activities and provide advice. Those that aren't needed will be eliminated and overall funding for such entities will be cut 25 percent in 2011.

Gates also said the department would cut 10 percent of funding for intelligence advisory and assistance contracts as well as freeze the number of SES positions in Defense intelligence organizations.

In addition, Gates said the Pentagon would eliminate entire organizations, including the Business Transformation Agency. The agency, with a staff of 360 workers and an annual budget of $340 million, was created in 2006 to modernize the department's business practices but it had shifted its focus to daily oversight of individual acquisition programs. Its responsibilities now will be shifted to the deputy chief management officer.

The Office of the Assistant Secretary of Defense for Networks and Information Integration, along with the corresponding J6 function on the Joint Staff also will be eliminated. The offices' operational functions will be assigned to other staffs and a re-fashioned chief information office.

Gates also recommended that President Obama eliminate Joint Forces Command and reassigning its force management and sourcing functions to the Joint Staff, something the president can do without congressional approval, according to Defense officials. The command employs about 2,800 military and civilian positions and roughly 3,000 contractors at an annual cost of $240 million.

Gates expects "measurable results" in achieving his directives in 90 to 120 days.

He also said he was aware of the human toll his announcement would take: "A number of full-time employees will have to find other positions or no longer work in this department. Like millions of Americans affected by this tough economic climate, I know these changes will likely mean real hardship for displaced employees and their families," he said.

To ease some of the personnel hardships, Gates directed Clifford Stanley, undersecretary for personnel and readiness, to work with leaders of affected organizations to assist employees in what likely will be a difficult transition.

"The culture of endless money that has taken hold must be replaced by a culture of savings and restraint," Gates said.

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