DOD CMO boasts $11B in savings as Congress moves to cut position

The Defense Department has saved $11 billion in the past two years thanks to reform efforts, according to a top official.

“We’ve introduced reform as a replacement to across the board cuts; that’s something very new for this organization,” said Lisa Hershman, DOD’s chief management officer in charge of implementing reform throughout the defense agencies frequently referred to as the Fourth Estate.

“We have realized, validated $11.2 billion in savings. We have identified opportunity for in excess of another $8 billion,” she said during a July 13 FedInsider event on national security and the coronavirus, adding that details are being developed on how to realize the additional savings.

Hershman’s comments come after Senate and House defense committees passed bills with provisions that would eliminate or restructure the DOD CMO position and congressional leaders have questioned the CMO role’s effectiveness. The position has been around only since 2018.

Hershman didn’t directly address the bills, but said she’s “not a believer in across the board cuts” because some areas need investment while others may require larger reductions. She added that replacing cuts with reform initiatives was more effective.

But some of those initiatives, including evaluating the Fourth Estate’s unified budget build and program objective memorandum process, were derailed as the coronavirus pandemic and resulting social distancing measures took hold in March.

“We had to shift our priorities and this had an impact on the data insights [directorate] team to move to largely unclassified work for folks in the building,” she said. (The CMO’s data insights directorate works with DOD’s comptroller office and is charged with helping DOD develop performance management metrics. It is now incorporating classified work into its evaluations.)

Despite the challenges, Hershman said reform initiatives were woven into the budget build with an emphasis on unclassified work.

Increased contracts during COVID

Alan Shaffer, DOD’s deputy acquisition chief, said DOD has shelled out upwards of $4.5 billion in other transaction agreements, Defense Production Act, and other investments since the coronavirus pandemic hit.

As a result, however, DOD is pushing for “reasonable” economic relief to offset added costs to program contracts, Shaffer said.

“We’re working with the Office of Management and Budget, and if there’s another supplemental or stimulus package for realistic economic readjustment, we could be looking at somewhere around $10 billion in additional program costs,” he said.

Shaffer’s comments come days after executives from prime defense contractors penned letters to the Pentagon and the White House asking for supplemental funding. The acquisition official didn’t reference the letter, which was written by major contractors like Boeing, but said DOD would prefer that any stimulus money go to small businesses. 

“We prefer not to have that amount of money not flow down to the sub-tiers, but we’re going to be at this for a while,” he said.