Talking About Defense: Can Pentagon Inc. sell its IPO reforms?

Now that CEO Donald Rumsfeld has succeeded in recruiting the business executives he wanted for Pentagon Inc., his next big challenge is to succeed in the initial public offering of his reforms. This will not be an easy sell within Pentagon Inc., the White House, or Congress.

Within the Pentagon, the Joint Chiefs of Staff feel frozen out of Defense Secretary Rumsfeld's myriad strategic reviews. They fear the worst, especially the Army chief and his deputies. Although they are muzzled from speaking out publicly, the Army brass point to and embrace the fears expressed in this e-mail sent last week to Washington influentials by Gen. Gordon Sullivan, the former Army chief of staff, who is now safely retired:

"My sensing is the Army will suffer greatly because of flawed assumptions and theories. My prediction is we will soon hear the following: The world is such that we have no threats in the near future, so we can take a strategic pause" and skip a generation of weapons, rather than upgrade the ones in hand.

"When combined with an assertion that we don't need to be forward based in the Middle East, Balkans, or Central Europe as we are today, [this] means the nation can come home from far away places," and reduce the size of the Army, Sullivan wrote.

"While I am not opposed to change," Sullivan continued, "it strikes me the Army could carry a disproportionate share of the load in the transformation of the [Defense Department].... And I fear, if my predictions are right, we will have taken the wrong fork in the road, and once again pay the price in the blood of soldiers."

Navy, Air Force, and Marine leaders are also apprehensive about the promised Rumsfeld revolution. What will happen to the Navy's new generation DD-21 destroyer? The Air Force's plan to buy 341 F-22 fighters? The Marines' V-22 Osprey troop carrier? Will Rumsfeld want these weapons canceled or stretched out to free up money for national missile defense, additional B-2 bombers, and military health care and other benefits?

Rumsfeld is counting on his corporate division chiefs--the secretaries of the Army, Navy, and Air Force--to reassure the uniformed military as he and President Bush unveil the Secretary's master plan bit by bit in the coming weeks. Rumsfeld will use these freshly confirmed wise men from industry--Army Secretary Thomas White, Navy Secretary Gordon England, and Air Force Secretary James Roche, along with procurement czar Edward "Pete" Aldridge--as his management committee. And if these managers should feel the need for spiritual guidance, they could call in the Pentagon's new comptroller, Dov Zakheim, who is a rabbi as well as a defense policy wonk.

Within the White House, Rumsfeld's most controversial reforms will be a tough sell. Budget chiefs are readying their knives for the Defense Secretary's expected requests for extra billions for this fiscal year and next. The White House already has warned congressional committees that a fiscal 2001 supplemental of $6.5 billion, just to pay this year's bills, is all the government can afford without breaking into the Social Security trust fund. Democrats will howl that this is not enough to keep the military ready to fight, much less to buy the new weapons the armed services want. They'll try to add billions to the President's request. Any big add-ons will set the stage for a veto if Bush makes good on his threat to slice off congressional pork.

Within Congress, probably more than anywhere else, Rumsfeld's IPOs will meet resistance. Every single weapon has defenders in the House and Senate. Members of the Appropriations and Armed Services committees will be in the best position to derail Rumsfeld's proposals. Although not on those committees, Senate Majority Leader Trent Lott of Mississippi is spring-loaded to attack any reforms that would cost jobs in his home state, particularly at Litton Ingalls Shipbuilding of Pascagoula. Taking on the DD-21 destroyer means taking on Lott.

Old hands at the Pentagon and in Congress predict that, rather than risk angering key lawmakers and their constituents in the run-up to the 2002 elections, Bush will reject recommendations that major weapons systems be canceled. He'll probably settle, instead, for less-controversial reforms, such as streamlining defense contracting; farming out more Pentagon work to private industry; overhauling Pentagon Inc.'s accounting system; and providing more money for the military's human needs, such as higher pay and better health care and housing. To revolutionize the American military anytime soon, Bush would need to wage a major campaign similar to the one he waged for his tax cut.

The last President to invest enough political capital to cancel major military weapons was Jimmy Carter, who scrapped the B-1 bomber and suspended construction of aircraft carriers. Congress went along with him reluctantly. But in the very next Administration, it backed President Reagan when he reversed Carter's decisions. Will Bush opt for revolution or evolution of the American military? That is the key question to be answered in the months ahead, with the old-timers in this town predicting revolutionary rhetoric--and evolutionary action.

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