5 Smart Options for the Pentagon’s Drawdown

This week, the Congressional Budget Office (CBO) released a major publication outlining, among other things, options for reducing Pentagon spending for the consideration of lawmakers as they navigate the defense drawdown through the 2014 NDAA and beyond. The report adds to the growing agreement among defense experts and military leaders that substantial Pentagon savings are possible and that the Department of Defense needs to change the way it does business to be more efficient and adapt to future threats. The options range from less to more intensive and totaled together amount to about $644 billion in potential savings options during the 2014-2023 timeframe when the Budget Control Act will remain in effect. Even the five most modest and sensible options from the point of view of national security, presented below, amount to $82 billion over the same timeframe, enabling savings to be dedicated to deficit reduction or partially reinvested in more critical areas of military capability.

Adapting the Pentagon to efficiently meet future needs: A tough but manageable task. Recently, Defense Secretary Hagel explained, “even as we deal with new budgetary constraints on defense spending, the United States will continue to represent nearly 40 percent of global defense expenditures. And most of the world’s other leading military powers are America’s close allies.” He went on, “The United States military has always proved capable of adapting to new realities and geopolitical alignments, even when resources were limited. In the face of reduced defense budgets and new challenges, our defense institutions must be reshaped to assure our military’s continuing capacity, capability, and readiness…We will need to more efficiently match our resources to our most important national security requirements.”

NSN Senior Advisor Major General Paul Eaton (ret.) explains the scope of change that will be necessary over the course of the drawdown: “The United States and its military are at a budgetary, diplomatic and military inflection point that suggests the need for a sweeping review of the Department of Defense – force structure, acquisition practices, headquarters and infrastructure. But such change is difficult to achieve inside a bureaucracy, and begs for an externally conducted review on the order of a new Goldwater-Nichols Act.” [Chuck Hagel, 11/5/13. Paul Eaton, 11/15/13]

Congressional Budget Office study widens menu of options available to policymakers to make smart tradeoffs to more efficiently adapt Pentagon to future threats.

1. Smart use of contractors – save $20 billion. CBO explains, “thousands of members of the military work in support, or ‘commercial,’ jobs that could be performed by civilians.” However, if “DoD would replace 70,000 of the more than 500,000 uniformed military personnel in commercial jobs with 47,000 civilian employees…those changes could reduce the need for appropriations by $20 billion” from 2015 to 2023 while performing the same commercial duties. Moreover, CBO identifies that DoD can benefit by taking a broader eye towards evaluating when using contractors makes good sense, “only a small percentage of military positions have been reviewed and evaluated for that purpose [of potential replacement by contractors].” [CBO, 11/13]

2. Cancelling the Ground Combat Vehicle (GCV) – save $15 billion.  The GCV is the Army’s next-generation armored fighting vehicle and transport to replace some of its Bradley Infantry Fighting Vehicles. However, the CBO explains that, the GCV “is too large and heavy to operate effectively in congested areas with limited space to maneuver; such conditions were common in Iraq and Afghanistan are likely to occur in the future. In contrast, the Bradley IFV is significantly smaller and lighter than the GCV and could be a better choice for potential future conflict.” CBO notes that cancelling the GCV would save $15 billion during 2014-2023. [CBO, 11/13]

3. Limiting the purchases of the Littoral Combat Ship to what the Navy really needs it for – save $12 billion. CBO explains the severe shortcoming of the Littoral Combat Ship (LCS): Naval assessments “currently rate the LCS poorly for being able to contribute to forward presence and sea control and power projection,” both key missions identified by the Navy. Additionally, “in contrast to some comparably sized ships in foreign navies, the LCS does not carry much firepower.” Given these facts, DoD should consider limiting “purchases of the LCS to the 24 now built or under contract, canceling the program thereafter. Doing so would reduce outlays by $12 billion from 2016 through 2023 (and $6 billion more beyond 2023).” Moreover, “Navy assessments indicate that the greatest need for the LCSs is for the ones that perform countermine missions; with 24 ships in the fleet, the Navy will already have substantially more countermine capability than today’s fleet provides.” [CBO, 11/13]

4. Maintain 10 carriers until 2020 – save $10 billion. The U.S. Navy is developing a new generation of nuclear aircraft carriers in order to sustain a legally required fleet size of 11 carriers. The first of this new Ford class, the Gerald R. Ford, was recently christened and two more are planned. However, the CBO explains that in the future, “the large aircraft carrier may no longer be an effective weapon system for defending U.S. interests overseas as new technologies designed to threaten and destroy surface ships are developed and spread to many countries,” including “long-range supersonic antiship cruise missiles, antiship ballistic missiles, very quiet submarines.” To adapt to this changing environment, the CBO explains that if the Ford class were cancelled after the next ship already in production, “this option would save $10 billion in outlays from 2016 through 2023.” Importantly, “The existing fleet and the carriers under construction would maintain the current size of the carrier force for a long time because the ships are designed to operate for 50 years…by 2030, the Navy would still field 10 carriers under this option.”  Moreover, “if stopping production did not accord with perceived national security interests in the future, the Navy could start building new carriers again.” [CBO, 11/13]

5. Grappling with the crisis in personnel compensation – save $25 billion.  At current growth rates, personal costs are projected to consume the entire DoD budget by 2039. Speaking to policy options to get personnel cost growth under control, the CBO notes that “DoD has consistently exceeded its goal of ensuring that the average cash compensation for military personnel…exceeds the wages and salaries received by 70 percent of civilians with comparable education and work experience.” However, the CBO notes that “$25 billion from 2015 through 2023″ would be saved if DoD were to slow the rate of future raises. (Specifically, cap future pay increases to be 0.5 percentage points less than the average increases in the rest of the labor market – what is called the Employment Cost Index). Regardless of savings in this or other proposals, however, personnel compensation issues present especially difficult moral challenges, but the status quo is not an option. [CBO, 11/13]