It Ain’t About the Hardware
Will the wars of the future be won by management consultants?
Folks in the defense universe in Washington, DC spend a lot of time in the arcade of debates. One of these debates is about U.S. military strategy in a changing world: Should we confront, contain, or partner with China? Should we engage or confront Iran? Should we intervene in Syria or let them work it through without deploying U.S. forces? Do we need to defend the global commons, or is that a cover for American military hegemony?
Another hardy perennial debate is about what the military should buy. More cyberdefense, or is that a cover for developing an offensive cyber capability? Is the F-35 the fighter of the future, or an expensive lemon we should put over the side? Do we need a new long-range bomber to prevail against a Chinese attempt to drive us from their borders, or is that another boondoggle we cannot afford?
Still another is about the future size and deployment of forces. Should they be forward, or held in the United States? Should the Army and Marines shrink, or stay the size they plan to be by 2016? Will the Navy get smaller and smaller, or grow to 300 ships or more?
Lovely, interesting questions, rife with huge disagreements among the military services, between the services and the Office of the Secretary of Defense, left-leaning think tanks versus right-leaning think tanks. Reams of paper, videos, testimony, the vast outreach of the defense-thinking complex.
It’s all great stuff; it keeps consultants, bureaucrats, elected officials, and the "chatterers" busy. But, and here’s the bottom line up front, if the Pentagon does not use the Strategic Choices and Management Review (SCMR), the next budget planning cycle, and the forthcoming Quadrennial Defense Review (QDR) to deal with its management issues, and if Congress fails to heed the need for management reform, all that debate will be irrelevant.
It won’t matter if you want more planes or fewer, more troops or a smaller force, the right hardware, or the opportunity to confront or befriend China. Declining defense budgets, already well underway, combined with the costs of people and property, will eat the tradeoff space that allows anyone to make sensible policy and hardware decisions.
It’s not just me talking. There was a striking letter and event on Monday, June 3, in which defense analysts from left to right joined forces in petitioning the administration and the Congress to ditch the politics of defense and focus on the management dilemma.
Twenty-five defense analysts got together on the letter, folks who spend many a happy hour debating each other on defense and national security. They ranged from Mackenzie Eaglen and Tom Donnelly of the American Enterprise Institute, Dov Zakheim of the Center for Strategic and International Studies, and Todd Harrison of the Center for Strategic and Budgetary Assessments, to Larry Korb from the Center for American Progress, Chris Preble of the CATO Institute, and myself and my colleagues Barry Blechman and Russell Rumbaugh from the Stimson Center.
And we agreed on some critical fundamentals that DOD, the White House, and Congress need to tend to: the encrusted and politically reinforced barnacles of pay and benefits for the troops and retirees, the sprawling physical infrastructure of the military, and what Secretary Hagel himself once described as the "bloated" back office of administration at the Pentagon. There is no mystery meat here, no new research discoveries that need be made. The need for reform in these three things has been blindingly obvious to any observer for a very long time.
The military compensation and benefit system, generous to the forces, is now eating defense resources at an alarming rate. As the letter points out, military compensation costs per active troop rose 56 percent in constant dollars from FY 2001 to FY 2012, doubling in current, inflated dollars.
Pay for the forces has not only caught up with, but has passed comparable private sector pay, factored for age, education, and experience. We have a well-compensated military. And it retires well, too, with lifetime health care, retirement benefits after 20 years (though more than 80 percent of the enlistees do not get there, so get no retirement at all), and access to subsidized groceries through the commissary system. (For more, read this terrific piece on commissaries by Rajiv Chandrasekaran at the Washington Post.)
But now the pressure is on, in budgetary terms, and the entitlements for the military are squeezing funds for capability. As retired Gen. Arnold Punaro put it: "We don’t want the Pentagon to become a benefits operation that occasionally kills a terrorist."
Without breaking any faith with the forces, the system needs to be reformed. The Quadrennial Review of Military Compensation has proposed compensation and benefit reforms for a long time; they have not moved forward.
Todd Harrison of CSBA has argued we need to look at what servicemembers value most in their compensation and benefits — pay increases over early retirement, for example — and adjust the system accordingly.
Infrastructure is another growing problem — the letter points out that DOD estimates it has about 20 percent more infrastructure than it can use. Clearly, from a fiscal point of view, it is time for Congress to step up and legislate another base closure (BRAC) round. All the evaluation criteria we need to make sensible base closure decisions have been developed through four previous rounds; the administration has asked for a new one. Time to move ahead.
The big target for reform is the back office. The data are clear: DOD has too many duplicative offices, too much overhead, too much administration. The Defense Business Board estimated that the Pentagon’s overhead is something like 40 percent of the total budget. A large number of people are minding this back office. On the military side, something like a fourth of the military billets are doing commercial, not military work. Nearly 40 percent of the force does not deploy. On the civilian side, there are nearly 700,000 civil servants and something like another 700,000 contractors doing civil service-type work, often in DOD offices (and this excludes hardware contractor employment). The last three defense budget declines have led to an average of more than 30 percent reduction in the civilian workforce; this one is likely to follow this course and it needs to be carefully planned.
It all sounds like common sense. Moreover, with budgets going south, if something isn’t done about these management and personnel challenges, the funds to support strategy, forces, and equipment is what will get squeezed. The Center for Strategic and International Studies estimates that if the overhead and pay/benefits cost growth continue, by early in the next decade, they will reduce funding for forces and
procurement to unprecedentedly low levels.
So merrily the Pentagon system rolls along, with overhead costs eating the tracks behind it. And Congress does little about these issues; they are part of the problem. They are politically vulnerable to the lobbies for military pay and retiree benefits, to the politics of even appearing to question current practices, to the communities where the infrastructure is located, and to the services who protect back office billets.
The politics are merciless; the risks of talking common sense are real. I am certain this column will attract critique because of the politics. But the basic problem is pretty simple: If we don’t find reasonable, efficient, cost-saving ways of reforming pay and benefits, infrastructure, and the back office, as Mackenzie Eaglen said on the June 3 panel, there is an important promise to the American people we will not keep: the certainty that the military we build is the right force with the right tools to do the right job.
On that, all of us agreed. Hopefully, Congress will too, and soon.