Military faces stark choices in coming budget battles

Reforming an out-of-control acquisition process, reshaping the workforce as two long wars wind down, coping with shrinking budgets -- Defense Department officials have a lot on their plate. Now, those management challenges have been magnified in the aftermath of the nation's debt deal.

In a panel discussion Tuesday titled Innovation and Management in the Military, hosted by Government Executive, senior Pentagon officials discussed these concerns and their outlook for the future of the military.

Former Defense Secretary Robert Gates' 2010 efficiency initiative, through which the department sought to reform management to reap $100 billion in savings over five years, was an important beginning in reshaping priorities and cutting budgets, according to panel members.

"I think everyone in the department saw the coming downturn in spending," said Robert Work, undersecretary for the Navy.

Recent increases in Defense spending have not kept pace with Navy personnel costs, which have increased 27 percent since fiscal 1998, faster than the rate of inflation, Work said.

The Air Force also is coping with rising personnel costs, despite the fact that the service has shrunk during the last decade. Hypothetically, the service would have to let go of 47,000 employees to maintain personnel costs in the coming fiscal year, said Erin Conaton, undersecretary of the Air Force.

"There are a lot of ideas on the table, ranging from retirement changes to health care and allowance for housing," she said. "The challenge for the chiefs is trying to get a sense of which things can you change without breaking the faith of those who decided to serve and which things can you change without negatively impacting retention in the next decades."

Although those issues will become a top focus for the department, Work said it was premature to discuss the details of potential tough choices.

The panel expressed concern that the decisions made by a bipartisan deficit reduction committee could drastically affect the Pentagon's budget, which already has been targeted in cuts Congress would impose if the super committee cannot meet its deficit reduction targets.

"We're tying our hopes on the committee rather than sequestration," said Joseph Westphal, undersecretary of the Army, referring to the process of automatic cuts that will occur if the committee does not reach a deal later this year.

The lack of defense experts on the committee is also a concern, said Conaton, who previously served as the House Armed Services Committee staff director.

"What we would like to make sure is if they're going to take additional reductions, that they do so consciously with an understanding of the implications, not only for the military, but for what the United States can do around the world," Conaton said.

Despite impending budget cuts, panelists said they saw opportunities for future improvement.

"I tell people all the time, if you're going to be in government, this is the time to be in government. Because the decisions we make over the next eight to 10 months are going to shape the department over the next ten decades," said Work. "If you aren't excited about that opportunity, then you're in the wrong damn business."

Clarification: Air Force Undersecretary Erin Conaton's comments about hypothetical personnel cuts were intended only to make a point about rising personnel costs. The Air Force has no plans to reduce the service by 47,000 personnel, nor did Conaton suggest such plans were under consideration.