Biting the Bullet

or an organization struggling to maintain its equilibrium through a budgetary free fall, the news hit like an unexpected blast of turbulence. When the U.S. Army submitted its proposed fiscal 1997 budget earlier this year, Defense Secretary William J. Perry instructed the service to plan for an additional cut of 20,000 troops to pay for much-needed weapons modernization. The Army had already seen its budget plummet by 38 percent since 1989, while troop levels dropped by 35 percent. Counting civilians and reservists, the Army has separated more personnel in the last six years-nearly 500,000-than are employed by Ford Motor Co. and Chrysler Corp. combined. The long, post-Cold War descent was supposed to end in 1997, as the Army reached a steady end-state of 495,000 troops. Now, somehow, the parachute failed to open.

In normal times, Army leaders would simply salute their civilian master and make the requisite adjustments. Army Chief of Staff Gen. Dennis Reimer, however, had recently returned from a "bunker briefing" in the Army's Operation Center, and he knew these were not normal times. In the midst of the most dramatic military drawdown in decades, the pace of Army deployments has increased by more than 300 percent.

In addition to the 100,000 soldiers in Europe and Korea, the Army now has nearly 40,000 soldiers deployed in 65 countries. Just in the last two years, Army troops have deterred aggression in Kuwait, helped support a fledgling democracy in Haiti, protected Kurds in Iraq, acted as peacekeepers in Macedonia, Peru and the Sinai, provided humanitarian assistance to Caribbean refugees, and supported disaster relief efforts in Oklahoma City and the U.S. Virgin Islands. Those operations come on top of the deployment of 20,000 soldiers to Bosnia as part of a NATO peacekeeping force.

So rather than simply accept an additional cut of 20,000 troops, Army leaders argued that they could squeeze the necessary modernization funds out of acquisition reforms and operating efficiencies. Given the extraordinary pace of operations, Army leaders insisted they couldn't in good conscience cut the active-duty ranks further. Perhaps more than any other single action, the fact that the Army leadership publicly dug in its heels signaled just how tenuous the post-Cold War balancing act between requirements and resources has become. When the Office of the Secretary of Defense submitted the fiscal 1997 Defense budget, it contained no further Army troop cuts, at least for now.

"The fact that we have people constantly deploying all over the world, in addition to the already busy pace of operations necessary to keep the Army trained and ready, was a big reason why we were so concerned about that proposed cut of 20,000 troops," said Reimer in a recent interview with Government Executive. The other reason the proposed troop reduction so bothered Army leaders, says Reimer, was the uncertainty it added to an already stressed organization.

"When I came into this job," he says, "there was still a feeling in the field that we were on a slippery slope, and no one could see the bottom. So I decided that more than anything else, the Army needed some stability."

A Budget War

While avoiding the 20,000-troop reduction represents a tactical victory, Reimer knows it is just one battle in a looming budget war. All of the services and the Joint Staff, for instance, are scrambling to respond to a directive from Congress that they produce a comprehensive Quadrennial Defense Review by May 15. Their efforts are expected to result in the most fundamental assessment of the post-Cold War military since the September 1993 release of the Bottom-Up Review (BUR), the Clinton Administration's seminal blueprint for the present U.S. military force.

That blueprint required that U.S. armed forces be prepared to fight, nearly simultaneously, two major regional conflicts-or "MRCs" in Pentagon-speak-on the order of conflicts in Iraq and North Korea.

A key motivation behind Congress' insistence on a new, comprehensive review, however, is the belief by many experts on Capitol Hill that the United States simply cannot afford the present force. That point has been made by both the Congressional Budget Office and the General Accounting Office, which predict a $50 billion to $150 billion funding shortfall under the Pentagon's current plan for the future. In recent internal briefings, sources say, the Pentagon's Office of Programs, Analysis and Evaluations has projected a gap of roughly $90 billion between Defense Department plans and resources over the next five years.

Because new weapons purchases already have been delayed for years, with acquisition accounts dropping by 71 percent in inflation-adjusted dollars in the last decade, Pentagon officials consider modernization a top priority. To stave off the recently proposed troop cuts, however, the Army was forced to cancel the Armored Gun System, a major acquisition program. The service also sliced $8 million from the Line-of-Sight Antitank system and $20 million from digital technologies viewed as critical to the high-tech Army of the 21st century.

Force readiness and operations and maintenance accounts, meanwhile, have been continually strained to meet the 300 percent increase in deployments since 1990.

"An awful lot of our dollars are going to operations, maintenance and readiness at a time when it's becoming more and more urgent that we start to modernize," says a civilian Army official. "How we keep doing this with a declining defense budget is a question no one has fully answered."

With modernization and operations and maintenance accounts off the table, virtually the only source still capable of yielding major savings is the basic active duty force of 10 Army divisions and 495,000 troops, all of which Army experts say are necessary to meet the requirement to fight two MRCs. The resulting quandary has led a number of influential defense experts to argue for dropping the two-conflict requirement altogether.

"I think the whole debate on two MRCs is an entirely artificial construct, and because it tends to replay past wars, there's no reason to believe that it will provide the best answers to the future," says Richard N. Perle, an assistant Defense secretary under President Reagan who is heading a study by the American Enterprise Institute on a new post-Cold War military strategy and force structure. "I also believe the services are kidding themselves if they think they can invoke the two-MRC requirement to avoid budget pressures."

Because it has the largest personnel rolls, the Army is considered especially vulnerable to potential force structure and troop cuts likely to be proposed in the Quadrennial Defense Review (QDR). Yet when he looks around the world, Reimer says he sees little strategic rationale for dropping the two-MRC requirement.

"I realize the pressures in this town will be for further cuts in the QDR, but you have to look at force structure in terms of our strategy and what the nation wants us to do. In that sense, I think we can make a very strong argument that the Army is already structured and sized about right," says Reimer. "When I look around, I still see a dangerous world with a couple of places where I'm concerned combat could break out: specifically southwest Asia, where Saddam Hussein and Iran are still problems, and Korea, where there's a lot of uncertainty right now. So I'm not saying that our troop strength of 495,000 is chiseled in stone. But when people argue that we can adjust our strategy to prepare for just one major conflict, my question is, which threat do we wish away?"

Reorganizing the Force

Rather than cutting force structure outright, Army planners hope to tweak the present organization in ways that will yield efficiencies and savings. In a major research project dubbed Force XXI, for instance, the service is evaluating how best to adapt organizational structures, doctrine and equipment to maximize the impact of new technologies. As part of that redesign effort, the Army has drafted an organizational concept for a future division that calls for roughly 15 percent fewer soldiers (from 18,000 to 15,000 soldiers).

In announcing last November that he would not force the Army to cut 20,000 soldiers in fiscal 1997, Defense Secretary Perry noted the importance of the Force XXI effort to the Army's ability to live within future budgets. "We accept the Army's argument that with the requirements they are facing today, they cannot and should not cut force structure or cut capability," Perry told defense reporters. "But I asked them to look very carefully at whether the introduction of new technology and new organizational approaches could allow them to reduce personnel while maintaining force structure and maintaining or increasing capability."

Internally, Army sources say, one organizational approach prompting vigorous debate is the idea that the Army should reconfigure itself to better reflect the post-Cold War emphasis on peacekeeping missions and "operations other than war." While the present Army force structure of six heavy and four light divisions was designed specifically with two major regional conflicts in mind, force planners have long noted that peacekeeping missions often place a premium on different capabilities.

"One primary reason for our high personnel tempo is that the active duty force structure doesn't include enough military police, civil affairs, combat engineers, psychological operations, and other support units that are in high demand on peacekeeping operations," says an Army official. "But whenever someone suggests that the Army should reshape its forces to better contend with these operations other than war, which are driving us crazy, the uniformed guys get very nervous about the impact on the Army's ability to fight two major conflicts."

In one effort to better fill post-Cold War shortages in support personnel, the Army has agreed to a major redesign of its Reserve force structure. Under a Defense Department plan, the Army National Guard has agreed to transform 12 of its 42 combat brigades into quartermaster, transportation and other support units. The Army has also increased equipment funding and training, and supplied a cadre of full-time, active-duty officers, for 15 National Guard "enhanced brigades" that could reinforce active-duty forces if two conflicts did indeed erupt nearly simultaneously.

Despite the changes, the Army's Reserve component has declined by only 26 percent since 1989, versus 36 percent for the active component. While the redesign ensured that the Army will be even more dependent on its reserve component in the future, several studies have indicated that the Pentagon could cut another 50,000 National Guard troops out of a total of 367,000. The reserve components, however, enjoy very strong support on Capitol Hill.

"I'd like to see a little more of a shift in the Reserve component from combat to combat service support, but not everyone agrees with me on that. We're still working our way through this issue," says Reimer. Although roughly 5,000 Army reservists have participated in the Bosnian deployment, he warned against assuming that the Reserves can shoulder significantly more of the burden created by peacekeeping missions.

"Bosnia has been a great example of where Reserve units such as civil affairs and psychological operations have been critical to our success, but it's not clear to me that we can significantly increase their participation in these operations," he says. "There's an issue of employer support involved. If you're hired to do a critical job at Ford Motor Co., I'm not sure how that company is going to react if we call you up for 270 days every couple of years."

Acquisition, Operation Reforms

Unwilling to cut force structure, Army planners have been forced to scour their acquisition and operational accounts for potential savings. Though Congress added $6.1 billion in additional weapons procurement to the fiscal 1997 Defense authorization bill, relatively little of the increase was targeted at the Army, and the additions did little to close the existing gap between Defense plans and projected funding levels.

Military leaders have maintained they immediately need at least a combined $60 billion annually for procurement-far above the $44.1 billion appropriated in fiscal 1997 and roughly a 40 percent increase over planned spending levels-to replace aging equipment. The Army's Comanche helicopter program, for instance, was once considered the service's highest priority program. The twin-engine helicopter, which is designed to replace the OH-58 scout and AH-1 Cobra attack helicopters, has been continually postponed, however, and is not expected to reach troops before 2006.

"The Comanche is not coming along as fast as we'd like to see it, but I'm comfortable with the schedule and I'm not willing to accelerate it at the expense of other programs," says Reimer. "As for the $60 billion figure, I don't really think we should get hung up on any one number. The point is to have $60 billion worth of buying power as a goal, and I think through acquisition reforms and operational efficiencies we could probably do that with less money."

Like its sister services, the Army is counting on significant savings from acquisition reforms introduced by Perry, most of which focus on streamlining procurement, eliminating burdensome regulations and military specifications, and buying more commercial, off-the-shelf products and services. The Pentagon has also launched a major effort to save money and reduce personnel overhead by privatizing support operations.

While proponents have optimistically projected savings of 15 percent to 30 percent from streamlining and privatization, most officials concede that it is still far too early to say whether acquisition reforms will live up to expectations. The problem, say a number of budget experts, is that the Defense Department continues to calculate its acquisition costs using extremely optimistic figures for weapons cost growth. The General Accounting Office, for instance, estimates that the Pentagon's procurement plan will fall $60 billion short.

Nor do Army officials see the push for privatization as a cure-all. "I'm not for privatization for its own sake, but I am for competition," says Reimer. "Where we can prove privatizing a function is more efficient and can save us force structure, and where it will not erode a core capability we need to retain in the uniformed ranks, we ought to adopt it. That doesn't mean, however, that we should rush to privatize all our operations. Our really top-notch, in-house workforce should also be given a chance to compete and prove their efficiency."

One area where Army officials hope to reap major savings and efficiencies is in logistics and support operations. The service recently adopted a new supply model that moves away from the old practice of stockpiling spare parts at every operational level, adopting instead a more transportation-dependent system that exploits the "next day delivery" made famous by such commercial companies as Federal Express and United Parcel Service.

"In concentrating on our logistics operations, we used the theory of bank robber Willie Sutton: You go where the money is," says Reimer. In studying the commercial marketplace, the Army discovered that the best companies were turning over their supply inventories four or five times a year, versus once every four or five years in the Army's case.

"So we're moving toward the civilian, transportation-based model, where we no longer rely on large mountains of spare parts, but rather on rapid transportation to get the parts to the people who need them on time," says Reimer. To make the transition, the Army has begun investing heavily in new technologies that help logisticians track spare parts and which provide near total visibility of the Army supply chain.

Like most Pentagon officials, Reimer has been somewhat less encouraged by the amount of money the services saved in three painful rounds of base closures. Last year, for instance, the GAO used the Pentagon's own figures to conclude that from 1996 to 2001, savings from base closings and force reductions would be more than offset by more than $21 billion worth of increases in military pay, family housing and other "quality of life" improvements.

"Savings have accrued from us no longer having to run those bases, and we've plowed them back into running the Army. However, I would agree that there were some predictions of savings from base closure that we never realized," says Reimer, who points to the unanticipated cost of environmental cleanup at many bases as a major reason for the discrepancy. As for putting savings toward quality-of-life improvements versus modernization, he is unapologetic.

"We approached the entire drawdown with the basic philosophy that people are our bottom line, and we were determined to take care of both the Army people who left, and those who stayed. That meant mortgaging our modernization plan a little bit," says Reimer. While much of the focus has been on pay raises and construction of family housing, Reimer says the Army's concern for its people is equally evident in smaller steps.

"In Bosnia, we learned that if you don't cover the home front the soldiers don't perform well, so we paid a lot of attention to taking care of those families in Germany," says Reimer. "Or it can be small things, like not training on weekends or stopping work at 3:30 in the afternoon on Thursdays at Fort Hood, Texas, so soldiers can see their kids and have dinner with their families. That focus on quality of life is terribly important, because the Army has missed a lot of dinners in the last few years."