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Gates Reveals Budget Efficiencies, Reinvestment Possibilities

By Jim Garamone
American Forces Press Service

WASHINGTON, Jan. 6, 2011 – The Defense Department has found $154 billion in efficiencies over the next five years and will be able to invest $70 billion of that saved money in more deserving accounts, Defense Secretary Robert M. Gates said today.

The secretary announced the savings and reinvesting of the efficiencies during a Pentagon news conference.

Gates emphasized that the nation is at war and faces a range of future security threats. “It is important to not repeat the mistakes of the past by making drastic and ill-conceived cuts to the overall defense budget,” he said. “At the same time, it is imperative for this department to eliminate wasteful, excessive and unneeded spending.”

Gates said he wants every dollar invested in defense spent in the smartest manner. The efficiencies continue a process to reshape and re-balance the defense budget that has already saved the nation $300 billion, he noted.

The secretary announced efficiencies in modernization accounts. He said he agrees with the Navy and Marine Corps recommendation to cancel the expeditionary fighting vehicle program, which already has consumed $3 billion to develop and would require another $12 billion to build.

Gates said he also will restructure the F-35 joint strike fighter program. The Air Force and Navy variants of the fighter are on schedule, but the short take-off and landing variant is experiencing significant testing problems.

“As a result, I am placing the STOVL variant on the equivalent of a two-year probation,” Gates said. “If we cannot fix this variant during this time frame and get it back on track in terms of performance, cost and schedule, then I believe it should be cancelled.”

The secretary said he also wants changes to the military’s TRICARE medical program, noting that fees have not risen since the program was introduced in 1995. He said he will propose modest increases to fees for working-age military retirees.

These changes also will be part of the fiscal 2012 budget request. The Army will cancel procurement of the SLAMRAAM surface-to air-missile and the non-line-of-sight launch system.

The efficiencies will change the way the department uses information technology, consolidating hundreds of information technology centers to save more than $1 billion a year, Gates said.

“At the same time,” he added, “I am not satisfied with the progress we have made in this area since August, and expect to make a follow-on announcement with a specific plan of action by next month.”

The efficiencies will cut the number of contractors. “Overall, we will cut the size of the staff support contractor cadre by 10 percent per year for three years and realize nearly $6 billion in total savings,” the secretary said.

A third efficiency will trim the size of the defense work force and place more in areas with the most pressing need, he said. This should yield $4 billion in savings, he added.

Gates also said he’s initiating changes in the defense intelligence apparatus, and will eliminate or downgrade general and flag officer positions. He will also eliminate or downgrade 200 senior executive positions.

The efficiencies will eliminate the Office of the Assistant Secretary of Defense for Network Intelligence and Information, the Business Transformation Agency and the U.S. Joint Forces Command, Gates said, though roughly 50 percent of Joint Forces Command will survive and be assigned to other organizations.

In April, Gates instructed the services to find at least $100 billion over five years in overhead savings that they could keep and shift to higher-priority programs. They have done so. In addition, defense agencies have found $54 billion in possible efficiencies.

Air Force leaders have proposed efficiencies that will total $34 billion over five years. The Army has proposed $29 billion in savings, and the Navy looks to savings of $35 billion over five years.

Of the $100 billion in savings, the services will use about $28 billion to deal with higher-than-expected operating expenses. These costs include health care, pay and housing allowances, sustainment of weapons systems, depot maintenance, base support and flight hours and other training.

“Frankly, using the savings in this way was not my original intent or preference,” Gates said, “but we have little choice but to deal with these so-called ‘must-pay’ bills –- and better to confront them honestly now than through raiding investment accounts later.”

But this still leaves the services with $70 billion to reinvest in higher priority systems. In the Air Force, this will mean the service can buy more Reaper unmanned aerial vehicles and enable the service to move this capability from the war budget to the base budget. It will also allow the service to increase procurement of the evolved expendable launch vehicle and to modernize radars aboard the F-15 Eagle to keep the fighter jet flying and fighting longer.

The Air Force also will be able to invest in development of a long-range, nuclear-capable bomber.

The Army will invest in soldiers by improving suicide-prevention and substance-abuse counseling. The service will also modernize its battle fleets of Abrams tanks, Bradley fighting vehicles and Stryker wheeled vehicles. The service also will accelerate fielding of the newest tactical communications network and will invest in more unmanned aerial vehicles and a new unmanned helicopter.

The Navy will accelerate procurement of electronic jamming gear and fund refurbishment of Marine Corps equipment. The service is also looking to develop a new generation of sea-borne unmanned strike and surveillance aircraft, and to buy more F-18 Super Hornets. The Navy also will be able to buy more ships, including a destroyer, a littoral combat ship and fleet oilers.

Gates stressed the need to make cuts carefully and judiciously.

“To maintain the kind of military needed for America’s leadership role requires not only adequate levels of funding, but also fundamentally changing the way our defense establishment spends money and does business,” Gates said. “That is why it is so important to follow through on the program of reform and overhead reduction.

“This department simply cannot risk continuing down the same path -– where our investment priorities, bureaucratic habits and lax attitude towards costs are increasingly divorced from the real threats of today, the growing perils of tomorrow and the nation’s grim financial outlook,” he added.

 

Contact Author

Biographies:
Robert M. Gates

Related Sites:
Special: Defense Efficiencies Initiative
Speech
Transcript
News Release: DOD Announces $150 Billion Reinvestment
Video: Gates, Mullen Briefing
Video - Briefing Q&A
Statement by the Commandant of the Marine Corps Gen. James Amos
Statement by the Secretary of the Navy and the Chief of Naval Operations on Efficiencies
Statement by the Secretary of the Army John Mchugh on Efficiencies
Statement by Secretary of the Air Force Michael Donley and Chief of Staff of the Air Force Gen. Norton Schwartz



Comments

Article is closed to new comments.

The opinions expressed in the following comments do not necessarily reflect those of the U.S. Department of Defense.

3/22/2011 1:39:40 PM
The First Ammendmant gives everyone the right to Freedom of Speech; however as a retired Soldier from the United States Army, I seem to remember that our former Code of Conduct began with, "I am an American, I serve in the forces which protect our nation and its way of life (the First Ammendmant is one way of life) and it ends with,"I am prepared to GIVE MY LIFE in its defense". Someone who makes a statement about cutting out programs such as family support either doesn't have a family or has never been in the military. I think that the SECDEF Mr. Gates has one of the hardest jobs in the country; Its very hard to fight and win in war when you are met with opposition at home (We are working to protect many theatres abroad, we don't need another war at home!). We as a nation need to work together to come up with better solutions to our problems instead of more problems compounded by more problems
- Dennis Ross, Ft. Belvoir, Virginia

1/23/2011 6:22:50 PM
This is in regards to the comment left by Ms. Peters. I would like to know her background and what has led her to be so callous toward military personnel and their families. I am very thankful to all of our soldiers who fight for our country. But it is not just the soldiers who bear the burden but their families as well. There are many mothers who are left alone to rear their children in absence of their husbands (and likewise husbands of female soldiers) who are deployed. They deserve not only credit for their sacrifice but absolutely the country's support. I think it is very unpatriotic for anyone to think otherwise. For the record, I do not have any relatives or loved ones currently in the military; this is not a self-serving editorial.
- Emily, clinton, mi

1/7/2011 5:29:18 PM
Cut out all the politically correct stuff. Steamline regulations to make it easier -- and popular to get rid of non-deployable personnel. Target cuts to get rid of 75% of non-combat field grade officer and senior NCO (E8-E9) positions in the Active Component and the Reserve/National Guard. Get rid of entitlement junk like Family Support. If military personnel cannot support and sustain their families while they are mobilized/deployed, then they ought not be in the military, so get rid of them, or don't let them in in the first place.
- Betty Peters, Columbus, OH

1/7/2011 11:53:53 AM
How can Mr. Gates attack the military personnel benefits system? The secretary said he will propose modest increases to fees for working-age military retirees. I would like to propose he apply this analogy to him and his family after he has retired. Is it only those who are old and least able to defend themselves from government that they should become targets to easy exploitation? It appears the government is one of the few entitys that feels it is okay to promise something and then after you have earned it changing the rules and making you pay for it again.
- Gerald Welty, 260 Tierra Grande, Cibolo, TX. 78108

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