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DEFENSE COMMUNITIES 360

DOD Identifies Source of $78B in Deficit Savings

  • March 30, 2011
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The Pentagon’s contribution to reducing the federal deficit primarily is the product of shedding excess overhead, improving business practices, reducing personnel costs and changing economic assumptions, Comptroller Robert Hale told the Senate Armed Services’ Readiness and Management Support Subcommittee Tuesday.

Of the $78 billion in five-year savings DOD has proposed to trim from the top line of its budget from fiscal 2012 through FY 2016, only $10 billion involves warfighting capability — $4 billion from restructuring the Joint Strike Fighter program and $6 billion from a proposed reduction in the end strength of the Army and Marine Corps.

The largest chunk in savings would come from freezing civilian personnel levels ($13 billion) and salaries ($12 billion). Only $6 billion would result from reducing staff support contractors by 10 percent per year for three years, noted GovernmentExecutive.com. Improved management of healthcare cost growth and increased TRICARE fees for working-age retirees would account for almost $8 billion in savings. About $11 billion would be saved by defense agencies and the office of the defense secretary from reducing overhead, staffing and expenses, and more efficient contracting. The department would save roughly $100 million from paring 100 flag officers and about 200 Senior Executive Service or equivalent positions.

The cost savings reflect a slower rate of growth in defense spending over the next five years and do not represent a cut in the DOD budget compared to current levels, Hale told the panel. In a separate streamlining exercise, the services found $100 billion in savings from FY 2012 to FY 2016 that would be reinvested in higher priority military capabilities and higher-than-expected operating costs.

To read the comptroller’s testimony or to watch a webcast of the March 29 hearing on DOD’s efficiencies initiative, visit the Armed Services Committee’s website.

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