DOD aims to slash budget by $100B to pay for war

Defense Department agencies have until July 31 to submit proposals on how they plan to shave between $1 billion and $2 billion in spending for fiscal 2012, as part of multi-year directive from Secretary of Defense Robert Gates to allocate more funds for warfighting.

Gates, in statement released Friday, said that budget cuts should focus on headquarters and administrative functions, support activities and overhead.

The crackdown on DOD budgets is being led by William Lynn III, deputy defense secretary, who spoke at the Pentagon Friday morning. According to Lynn, DOD is looking to trim $100 billion over the next five years from existing programs, allocating those funds to combat operations and capabilities.

“This is not an effort to reduce the defense budget or ‘top line,’” Lynn said. “This is about operating within a constrained top line and trying to get enough resources into that war-fighting end, in addition to developing that operating capability.”

Lynn said the directive hinges on three main tenets: cutting non-essential programs, shifting money saved to force re-structuring and modernization and increasing DOD program efficiency.

The Army, Navy and Air Force each are being asked to identify $2 billion in savings for 2012, and the rest of the department agencies $1 billion each.

Last month, Gates said two-thirds of the savings must be actual transfers of funds from non-combat accounts to war-fighting efforts, while the remaining third can be shaved from inefficiencies, redundancies and overhead.

In the February Quadrennial Defense Review, DOD projected 1 percent real growth in Pentagon budgets for the next five years, but Lynn said historically, 2 to 3 percent real growth has been necessary to sustain defense capabilities.

“This is an effort to develop that 2 to 3 percent with these internal changes, these efficiencies and these reductions in overhead and infrastructure,” Lynn said. “We’re trying to get that 2 to 3 percent in the accounts where it is needed – force structure and modernization – without asking for an increase in the top line.”

Nothing is off the table in the hunt for savings. According to the New York Times, Gates said three areas of spending will be targeted: personnel, overhead, logistics and base operations and support missions; war-fighting accounts; and DOD staff and agencies.

Some combat programs on the chopping block have already been identified, including plans for acquiring an alternative engine for the F-35 fighter jet and production of the C-17 cargo aircraft.

Lynn also left open the possibility of scaling back on plans for more F-35 fighter jets, for which DOD requested nearly $11.5 billion to fund in fiscal 2011. However, Christine Fox, director of DOD’s cost assessment and program evaluation, said that the department won’t change the number of aircraft it plans to procure. “We need those jets,” she said.

Additionally, Gates has publicly questioned the viability of a $13.2 billion amphibious armored personnel carrier called the Expeditionary Fighting Vehicle.

Health care costs are under consideration as well. In May Gates said that while the military deserves quality health care, service members have not faced premium increases in 15 years, despite the DOD health program’s ballooning costs, which increased to $50 billion from $19 billion a decade ago.

Lynn called the directive “ambitious” and hinted that the department is steeling itself for pushback from various vested interests. “History tells us this will be very hard,” he acknowledged.