Lawmakers enshrine Pentagon HQ cost-cutting into law

Thursday - 1/2/2014, 1:11pm EST

Defense Secretary Chuck Hagel has already set about implementing a plan to cut $1 billion from the Defense Department's budget by consolidating and reorganizing top Pentagon offices.

But lawmakers want to hold his feet to the fire. The final version of the National Defense Authorization Act passed by Congress Dec. 19 enshrines DoD's ambitious cost-cutting and streamlining plan into law.

President Barack Obama signed the annual legislation setting Pentagon policy and priorities on Dec. 26.

By June, Hagel must develop a plan for streamlining DoD management headquarters "by changing or reducing the size of staffs, eliminating tiers of management, cutting functions that provide little or no added value, and consolidating overlapping and duplicative programs and offices," according to the bill language.

The plan must include the estimated cumulative savings to be achieved over 10 years beginning in fiscal 2015 through 2024.

The law directs DoD to look across the Pentagon for potential savings, including the Office of the Secretary of Defense, the Joint Staff and the headquarters of the combatant commands, among other areas.

DoD is required to submit a status report to Congress as part of the annual budget process describing the implementation of the cost-cutting process.

The cost-cutting provisions included in the final legislation are similar to a provision first included in the Senate's version of the bill, which called on the Pentagon to reduce aggregate spending on management headquarters by at least $100 billion — a much more ambitious goal than the cost-savings envisioned by DoD's own plan.

However, the final version of the defense policy bill omits the Senate's savings targets and instead directs DoD to simply report on estimated cumulative savings from its consolidation efforts over a 10-year period.

DoD working on 20 percent 'across-the-top' cuts

In July, Hagel first announced he would seek a 20 percent "across-the-top" cut in top DoD offices, along with a reorganization and streamlining of roles and responsibilities. Hagel said these reforms would reduce overhead and operating costs by as much as $10 billion over the next five years and make the department "more agile and versatile."

Former Air Force Secretary Michael Donley, who had recently retired, was tasked with studying potential cost-savings coming up with a list of recommendations for streamlining Pentagon headquarters offices.

Last month, Hagel released the results of the study and announced the first round of reorganization: The elimination of a handful high- level DoD positions and the consolidation of several others. Total staff levels in the Office of the Secretary of Defense would decrease by 2,200 through fiscal 2019, leading to a savings of about $1 billion.

As part of the reorganization, the DoD chief information officer will take over from the deputy chief management officer the responsibility of overseeing the development of business IT systems. Meanwhile, the DCMO role would also be beefed up by absorbing the Defense Civil Liberties and Privacy Board and a few other key areas.

The Senate's Defense bill originally proposed creating an undersecretary of defense for management role, one that would incorporate the existing DCMO role as well as that of the performance improvement officer and chief information officer. However, the measure was not included in the final version of the bill.

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