Undeterred, the House Armed Services Committee put $485 million for the extra engine into its bill, along with more C-17s—and repeal of “Don’t Ask, Don’t Tell,” exactly the scenario I had worried about in terms of getting a presidential veto. The House committee, in which Democrats were a majority, was prepared to fight for the extra engine until the last dog died, but after months of debate and confrontation, the newly Republican-controlled House—led by Tea Party members—in February 2011 killed the program. A full vote in the Senate led to the same result. Proponents of buying more C-17s gave up the ghost more easily. So I had put two more notches on my budget gun. I had now secured congressional approval of all thirty-three program cuts or caps I had announced in April 2009, a record.
The history of Defense Department acquisition and development of new programs is rich in over-cost, overdue, and flawed programs. There have been enough studies on how to fix the problem to fill a room, and repeated attempts at legislative remedies have been made, including as recently as 2009. Ash Carter and I spent a lot of time talking about the problem, and I concluded that the principal fixes were pretty straightforward: make sure there is competition for contracts, but real competition, not the kind Congress likes where everybody wins (such as proposals on the Hill to split the Air Force tanker buy between Boeing and Airbus/EADs or for the F-35 alternative engine); have experienced and tough government contract negotiators, people with really sharp pencils; in big, long-term programs—excluding current wartime needs—wherever possible, build prototypes of new equipment, and don’t start production until testing is complete and problems have been resolved; freeze requirements early in the process (anybody who has ever added a room onto his house knows that if you change the plans after construction begins, it will cost you an arm and a leg; same thing with warplanes and ships); demand accountability—be willing to fire government project managers or contractor managers if programs go off the rails; finally, the secretary of defense has to get his (or her) hands dirty overseeing all this, getting knowledgeable enough about the big programs, and keeping up to speed on progress to be able to know when to blow the whistle if things go awry.
Responsibility for overseeing acquisition cannot be delegated to the deputy secretary, as has so often been the case in the past. This is not about micromanagement, it’s about accountability in leadership. Too many top executives in business and government think the details are beneath them, often with calamitous results. Frankly, I did not involve myself in acquisition issues in the Bush administration apart from urgent wartime needs, but I changed course early in the Obama presidency.
As we began to prepare the FY2012 budget in the spring of 2010, my sense of foreboding about Defense’s budgetary future turned to alarm as I listened to the debates in Congress, followed the media, and listened to Obama. I believed our budget would remain flat at best and probably decline. To afford the weapons programs and equipment that I strongly believed we had to buy, we would need to find the money internally. Defense’s base budget—not counting funding for the wars—had nearly doubled during the previous decade, and I believed the Pentagon had forgotten how to make tough decisions and to prioritize. We needed to begin to change a culture of spending into a culture of savings. This, then, required a new, even more aggressive examination of every part of the Defense Department. Thus began the “efficiencies” initiative of 2010.
I hoped to set the tone for what we would do in a speech on May 8 at the Dwight D. Eisenhower Library. Eisenhower, one of my great heroes, had told the Pentagon he wanted it cut down to “a Spartan basis,” noting that “I say the patriot today is the fellow who can do the job with less money.” I said in my speech that I found it compelling that under Eisenhower real choices were made, priorities set, and limits enforced—even in the face of a superpower adversary like the Soviet Union. The post-9/11 “gusher of defense spending,” I warned, “has been turned off and will stay off for a good period of time.” Accordingly, the department had to take a hard look at every aspect of how it was organized, staffed, and operated—indeed, every aspect of how it did business. I concluded: “The goal is to cut our overhead costs and to transfer those savings to force structure [military capabilities] and modernization…. What is required is not more study. Nor do we need more legislation. It is not a great mystery what needs to change. What it takes is the political will and willingness, as Eisenhower possessed, to make hard choices.”
Three and a half years into the job, I had again declared war on the Pentagon—on the 40 percent of its spending that went to overhead, on layers of bureaucracy that put as many as thirty layers of staff between me and an action officer, on unnecessary programs, on too many generals and admirals for the size of our forces, on too many senior civilians in the department, and on too many contractors.
Most of my predecessors railed about the same problems. But most were trying to cut budgets, and some, including Robert McNamara, had come up with dramatic reform and restructuring initiatives that were imposed by fiat on the military services. These efforts, not surprisingly, met with significant resistance from the military. My strategy was different. I told the services that the money they saved through changing their way of doing business and cutting overhead I would return to them to invest in military capabilities. As with the program cuts and caps in 2009, the services would be deeply involved in the process. Critically important was getting agreement in advance from the president and the new director of OMB, Jack Lew, that we could keep all the savings from these efforts to reinvest in military capabilities. They were both supportive.
Between mid-May and mid-December, I chaired nearly sixty meetings ranging from half an hour to nearly eight hours on the efficiencies initiative. We delved into every aspect of the Pentagon. I was intending to bring about a cultural shift—“How do we make this place more efficient, make staffs more lean, flatten decision making, and pay more attention to cutting unnecessary costs.” I did not want to wait eighteen months until FY2012 to begin implementing these changes; I wanted to identify things we could begin to do right away.
I went public with the first changes on August 9, 2010. Among other decisions, I announced we would:
• reduce funding for service support contractors by 10 percent a year for three years;
• freeze the number of positions in the office of the secretary of defense, Defense agencies, and the combatant commands for three years (except for hiring additional acquisition professionals);
• freeze the number of senior civilian executive and general and flag officer positions while a task force came up with recommendations to reduce general officer and flag positions by at least 50 and civilian executive positions by 100;
• impose dramatic cuts in funding for myriad reports and studies, as well as for outside advisory boards and commissions;
• reduce funding for Defense intelligence contracts, freeze the number of senior executive positions in Defense intelligence organizations, and carry out a “zero-based” review of all Defense intelligence missions, organizations, relationships, and contracts;
• eliminate organizations that performed duplicative functions or had outlived their usefulness.
To underscore the importance I attached to making these changes, I said that I intended that all the initiatives lead to operational plans or measurable results within 90 to 120 days, and I appointed Robert Rangel and Hoss Cartwright to cochair the effort.