Flournoy: Departmental Efficiencies to Begin at Top

By Donna Miles
American Forces Press Service

May 13, 2010 - Defense Secretary Robert M. Gates' call last week for more efficiency and less waste is starting at the top, with Pentagon components being told they'll lead the rest of the department by example, the secretary's top policy advisor said here today. "We have been put on notice; we are going to start this review for efficiencies with ourselves," Michele Flournoy, undersecretary of defense for policy, said during an appearance at the National Press Club.

Flournoy said she's reviewing her own organizational chart to identify how the office can do its job more efficiently. The ultimate question, she said, is, "Where can we get some savings that we can contribute to the pie?"

"I think every single [Defense Department] component is going to go through that exercise," Flournoy said. For some components, she said, the review will involve "fundamental, existential questions: 'Do we need this particular organization that may have been created 40 years ago in the new world we are in?'"

Flournoy emphasized that Gates' May 8 speech at the Eisenhower Library in Abilene, Kan., was about cutting duplicative overhead, bloat and needless spending – not capability.

"It's not [about] defense cuts," she said. "It's saying, 'We have to become more efficient and make better use of taxpayer dollars in how we operate.'"

Broad reviews of how the Defense Department is organized are just one part of the equation, she said. Gates' mandate also includes reforming the acquisition process, conserving energy and creating greater efficiencies throughout the department. Savings, she said, would be reinvested where they are most needed to support current security needs and to prepare for future ones.

These efforts began with the fiscal 2010 budget, which Flournoy said represented a "pretty dramatic set of decisions." The Quadrennial Defense Review and fiscal 2011 budget request build on this start, she added.

Not all the decisions have been popular within the Pentagon or on Capitol Hill, Flournoy conceded.

Gates has made it clear he will recommend that the president veto the fiscal 2011 budget if Congress adds costly items such as more C-17 transport aircraft to it. "We have got to be able to make choices about how to invest our next dollar for the nation's defense needs," Flournoy said. "We can't be forced to buy things we don't need any more."

The defense secretary, Flournoy said, is putting together "far-reaching plans" aimed at improving efficiencies and providing the department with the capabilities needed in the 21st century and beyond. Many proposed changes, she said, will require congressional approval.

"We are putting together a dramatic reform package for export control reforms to update the system. We can't do it without Congress," Flournoy said. "We are seeing to overhaul the way we do security assistance. We can't do it without Congress. We need relief on the health-care front, and we absolutely have to have Congress to help us."

Flournoy turned her attention to what many on Capitol Hill have considered a sacred cow – military personnel costs, particularly for health care.

The United States has made great progress, particularly since 2001, in closing the gap between military and civilian pay, she said, but the problem is that as a show of support for the force, Congress has regularly increased pay over levels the administration requested.

"What's happening, cumulatively, is that we are not considering the tradeoffs," Flournoy said. This is particularly troubling in the health-care arena, she said, with the Defense Department extending Tricare coverage to military retirees.

"We are now in a situation where people in the private sector forgo their private-sector benefits because it is better for them to stay in Tricare," Flournoy said. "Employers are saying, 'Take the military benefit and then I will give you another benefit instead,' so the government is carrying a lot of weight for the private sector in health care.

"If there was an infinite pot of money, that would be fine," she continued. "The problem is there is not an infinite pot of money. So those dollars are dollars we can't invest in equipment that our military needs today, and in the capabilities they are going to need to adapt to the future."

The long-term impact will be devastating, she warned.

"When you look at the budget pie over time, the amount of discretionary spending available for investment is getting smaller and smaller and smaller," she said. "If we don't somehow address this trend, you are going to get to a point where you don't have enough investment dollars to equip the force you need."

Flournoy said Gates is totally "committed to the care and support of our military men and women." However, she added, Gates also is concerned for the military's financial future.

"He feels this stewardship part of his job very deeply," Flournoy said. "But he also feels that part of that is worrying about being able to ensure he can equip the force for the future. And we are on a ... bad trajectory there. We have somehow got to rebalance."