As the Defense Department swings the cost-cutting axe, the bulk of savings will come from freezing personnel levels and salaries of military civilians, rather than cutting into service support contractors, according to a top Pentagon official who testified last week.
Senior military officials who are implementing the widespread DoD efficiency plan appeared before the Senate Armed Services Subcommittee on Readiness and Management Support and revealed more precisely where the $100 billion in savings from fiscal 2012 through 2016 will come from. The bulk of cuts will fall on DoD personnel. They also outlined an additional $78 billion in savings throughout the department that will be used to reduce the federal deficit.
Of the $78 billion saved to reduce the deficit, $68 billion was achieved by shedding excess overhead, improving business practices, reducing personnel costs, and changing economic assumptions. First, $13 billion will be saved through a department-wide hiring freeze through 2013, with the exception of increases in the acquisition workforce. Also, $12 billion will be saved by freezing civilian pay scales in fiscal 2011 and 2012. The Pentagon also hopes to cut $7.9 billion through 2016 by reforming its medical care and raising TRICARE fees for working-age retirees.
“I have never seen such far-reaching business streamlining,” said Defense Comptroller Robert Hale, in Government Executive.
Service contractors face more modest cuts with the Defense Department saying it will save $6 billion by reducing staff support contractors by 10 percent per year for three years. The Defense Department cited examples such as the offices of undersecretary of Defense for policy and acquisition which will cut nearly 270 contractors. The TRICARE Agency will cut more than 780 contractors, and the Missile Defense Agency more than 360.
Subcommittee Chairman Sen. Claire McCaskill, D-Mo., said civilian employees are bearing an unfair burden. In 2012, civilian employees will face $4.5 billion in cuts compared with $1.3 billion for contractors. “Is that really the best we can do?” she asked, as reported by Government Executive.
Regardless of the $78 billion in cuts, the Defense budget is expected to increase, with the department requesting $553 billion in fiscal 2012 and $611 billion in fiscal 2016, Hale said.
