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Gold In Them Thar Efficiencies

In his September 10, 2001 (alas, not to be) swan song speech, Donald Rumsfeld asserted that 50 percent of DoD spending was overhead. The money gusher that started the next day can only have increased that percentage, and yet a little while ago Deputy Defense Secretary William Lynn pronounced D0D overhead was 40 percent.  If you read the Defense Business Board briefing by Arnold Punaro, you'll find on slide 15 that overhead is put at "at least" $200 billion, or approximately Lynn's 40 percent.

No one has defined what overhead really is, let alone provided an independent study of how much DoD spends on it. The "factual" assertions above are all standard DoD "wisdom:" Sounds about right -- but not a scintilla of data was presented.

In Punaro's explanatory statement he laments that no one can figure out the cost and number of contractors, immediately followed by a citation from Undersecretary Carter that the number is 766,000, costing $155 billion (per year). Interesting as it is horrifying, but again not a shred of actual evidence.

At the end, Punaro recommends unloading some baggage, most prominently Joint Forces Command, and he promises to recommend more later this year. He also articulates some important ideas about reforming DoD pay and benefits and reducing their unaffordable costs. (But, sadly, he is almost silent about DoD's equally unaffordable behavior on hardware.)

I conclude three things:

That the $102 billion that the Gates/Lynn/Carter team wants to move in five years from overhead to force structure (it's not a savings; it's an internal transfer) is truly pathetic. Just scratching the surface, Punaro has ideas that suggest far, far more is hanging low off the fruit tree.

The quality of evidence that the Washington defense community likes to use to ground its ideas and recommendations is more akin to rumor and the buzz of the month. If there were to be an objective, independent, competent study of what DoD spends on overhead (reasonably defined) and if that number were not well above 50 percent of the Pentagon budget, you'd be able to knock me over with a feather.

The defense luminaries are swirling around the idea of reducing personnel costs. Some have good ideas; some are merely playing around the edges, but they all have one major purpose in mind: transfer the money to hardware. Ignore the fact that DoD's hardware path is every bit as unaffordable as the personnel path, and ignore the fact that more money, generously applied - for the last 10 years especially - has made the equipment inventory both smaller and older. Nevertheless, they can't get it out of their heads that heaving more money at unaffordable hardware will make it within our means.

This game needs new players.

Winslow T. Wheeler, a former GOP congressional budget expert, is director of the Straus Military Reform Project at the Center for Defense Information in Washington.

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