Defense Secretary to Eliminate Hundreds of Staff Jobs, Contractor Positions

As part of a sweeping reorganization of the office of the secretary of defense, as many as 500 positions could be eliminated over the next five years. The cuts will mostly affect contractor-help jobs, as well as some senior civilian posts.

“We will detail our plans to achieve these savings in the President’s budget submission next year,” Defense Secretary Chuck Hagel said Dec. 4 at a Pentagon news conference.

Hagel already had announced in July he intended to downsize OSD headquarters by 20 percent — one of several cost-cutting measures he proposed in the so-called Strategic Choices and Management Review that outlined how the military would live with smaller budgets.

Hagel said the OSD reorganization is only one piece of a broader “institutional reform” effort that is needed to resize the Pentagon bureaucracy for leaner times. He said he would ask Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey to propose similar reductions within his staff.

The restructuring will be based on recommendations by former Air Force Secretary Michael Donley, who was appointed by Hagel to lead a review panel. About 2,400 public-sector civilians, contractors and military officials work at OSD.

Pentagon officials must begin taking actions immediately in order to meet the 20 percent budget reduction goals by fiscal year 2019, Hagel said. “Much of these savings will be achieved through contractor reductions, although there will be reductions in civilian personnel.” Anticipated dollar savings are about $1 billion over five years.

OSD reforms will include the following:

• The office of the undersecretary of defense for policy will eliminate some senior executive service (SES) positions, including a deputy undersecretary of defense and an SES chief of staff. The plan phases out the SES-led Task Force on Business and Stability Operations, and realigns the portfolios of the five assistant secretaries of defense for policy. Four deputy assistant secretary of defense positions and their corresponding support structure will be axed through a consolidation and realignment of the overall staff.

• The deputy chief management officer position will be strengthened. The office of the director of administration and management will be folded under the DCMO. “Secretary Donley’s review found that since its inception, the DCMO has lacked the resources and mandate to effectively fulfill its role as a DoD-wide manager,” Hagel said.

• The DCMO office will become the focal point for DoD-wide  management, administration and business oversight. Hagel will transfer responsibility for business information-technology systems from DCMO to the Pentagon’s chief information officer. This will “strengthen DoD’s ability to address growing IT and cyber challenges,” Hagel said. The undersecretary of defense for acquisition, technology and logistics will continue to be responsible for acquisition of IT systems.

• Intelligence oversight and privacy compliance functions will be consolidated. The office of the assistant to the secretary of
defense for intelligence oversight and the defense privacy and civil liberties offices be combined into a single organization that will be aligned under the DCMO.

• The office of net assessment — which conducts long-term strategic planning and war gaming — will report to the undersecretary of defense for policy. “This change will better ensure that its long-range comparative analyses inform and influence DoD’s overall strategy and policy,” Hagel said.

• The acting undersecretary of defense for personnel and readiness will be directed to consolidate positions across three assistant secretaries of defense.

• The undersecretary of defense for intelligence will reduce staffing levels and programs.

• The five remaining deputy undersecretaries of defense who are not presidentially appointed or Senate-confirmed will be eliminated. Hagel said this complies with direction from Congress.

The cutbacks will help the Defense Department absorb only a small portion of the $500 billion in spending cuts prescribed in the Budget Control Act, which mandates across the board reductions for all federal agencies.

Defense analysts have long criticized the Pentagon for delaying staff reductions at a time when the military is having to pare back training and cancel other important functions because of the sequester cuts. Since sequestration took effect in March, Army training has plummeted, aircraft have been idled and fewer ships have been deployed. Meanwhile, the Pentagon continues to spend about half its budget on administrative overhead that contributes little to nothing to military war-fighting missions, said a September study by Stimson Center, a non-partisan think tank. Closing bases, firing civilians and eliminating contractor jobs are politically unpopular measures, but the alternative is to keep gutting the military's combat capabilities, the study said.

Philip Odeen, a member of both the Stimson advisory group and the Pentagon's Defense Business Board, said the financial weight of defense overhead is gradually sinking the military. Infrastructure and overhead amount to about $235 billion a year, or nearly half the entire defense budget. "None of that is related to fighting forces. That's a substantial target to go after." Military and civilian department headquarters alone consume $40 billion of that bill, he said. These are purely administrative functions with no responsibility for directing troops, he says.

By simply removing layers of management, the Pentagon could save $4 billion a year, said Odeen. "We have multiple layers" of management everywhere, he noted.

In the private sector, said Odeen, "companies took big actions. They cut pay, they closed facilities. ... In almost every case, as we talked to these leaders, they agreed, years later, that their organizations are stronger and more effective after having taken all these layers out," he said. "Our view is that the Pentagon ought to take a similar approach before we cut too deeply into force structure and procurement."

Topics: Defense Department, Civilian Workforce, DOD Budget, DOD Leadership, DOD Policy