Overhead Cuts Need Oversight
By: Mark Cancian
Everyone complains about the size of DOD’s overhead. As a result all the commentator and think tank assessments of DOD’s budget—yes, including CSIS’s— recommend squeezing overhead to make room for other needs, but especially investment, which historically gets cut disproportionately during budget downturns.
Arnold Punaro, for example, a former head of the Defense Business Board and now head of a defense industry association, has argued publicly and vigorously against the high cost of overhead, noting that there are 28 layers of management between DOD’s bottom and top and that 340,000 government personnel do commercial work. Secretary of Defense Robert Gates recognized the problem in 2010 and directed cuts in overhead. Secretary Chuck Hagel followed up with direction for a 20 percent headquarters cut. But the complaints continue as budget pressures increase.
The good news is that some overhead will come down automatically as personnel and operations shrink. Consider military schools—as the forces shrink, the number of students will shrink with them. But, to continue our school example, the number of instructors at the school may not shrink and the number of schools will certainly not shrink. To cut the latter requires management intervention, and that gets hard because every organization exists for a reason. As a result, good ideas about how to reduce overhead are elusive.
Too many bureaucrats in Washington? How about eliminating the service secretaries and their staffs as legacies of a pre-DOD era? Can’t do that, people argue—it disturbs the military-civilian balance! How about eliminating one of the massive logistics headquarters? Can’t do that—they were created to “integrate efforts” for efficiency! How about reducing the number of combatant commander headquarters by combining several, for example, NorthCom and SouthCom. Can’t do that—it will send the wrong signal to our allies! Clearly it’s hard.
In the 1990s, DOD faced a budget that was shrinking by a third after the Cold War. To ensure that overhead shrank proportionately, DOD brought in panels of outside experts to conduct a series of management reviews. It was just too hard for internal organizations to do this themselves. (“Navy, which of your fingers would you like us to cut off….”) Maybe it’s time to do that again.