Pentagon maps out $100 billion cost savings plan

Defense Secretary Robert Gates is ordering a departmentwide, five-year effort to find more than $100 billion in cost savings in the Pentagon's budget and redirect that money to pay for military weapons systems and force structure.

In the next several days, Pentagon leaders will direct the military services and defense agencies to scrub their budgets to find $7 billion in savings for the fiscal 2012 budget, Deputy Defense Secretary William Lynn said Friday.

Each of the three services will be responsible for coming up with $2 billion in savings for the fiscal 2012 budget request.

But as a strong incentive, the services will keep within their budgets whatever costs they cut over the next five years to pay their force structure and modernization bills.

The initial cost-savings plans are due by July 31, Lynn said.

After the $7 billion savings in fiscal 2012, the annual cost savings appear to increase significantly to reach a total of $100 billion by fiscal 2012.

The majority of the cost savings -- roughly two-thirds -- comes from trimming unnecessary overhead, which accounts for about 40 percent of the Defense Department's total budget.

The other third of the savings will come from cost cuts to force structure and modernization, which the Pentagon began last year when it canceled several weapons programs deemed unnecessary.

The initiative, which Gates first outlined in a May speech in Abilene, Kan., comes at a time of fiscal belt-tightening across the federal government.

The Pentagon, whose base budget has nearly doubled in size since 2001, is now expected to receive only 1 percent real growth in its future budgets. But Gates and Lynn have said the military needs about 2 to 3 percent real growth in its modernization and force structure accounts to maintain the force.

"This [initiative] is not about reducing the topline," Lynn said. "This is about operating within a constrained topline and trying to get enough resources into that war-fighting" capability.

During his Abilene speech, Gates signaled that his review will look at everything from eliminating unnecessary or duplicative commands to reducing the number of general officers in the military's ranks.

He also said he wanted to review whether executive or flag-officer billets could be converted to a lower grade to create "a flatter, more effective and less costly organization." And he said he wanted to look at how many commands or organizations are conducting repetitive or overlapping functions and could be combined or eliminated altogether.

Friday, Lynn acknowledged the challenge ahead for the department.

"History tells you this will be very hard, and I agree with that," he said.

But he stressed Gates' track record at making difficult choices, pointing to his success in ending weapons programs like the popular F-22 Raptor fighter jet and the troubled VH-71 presidential helicopter.