It is clear now that significant, possibly draconian, cuts in defense spending are coming. The size of the potential reductions is so great that it cannot be addressed by trimming programs at the edges, the so-called salami slicing technique. Nor can it be resolved by cutting procurement. The reality is that while defense spending increased significantly over the past decade, very little of that funding went to procurement to replace the Reagan era systems that dominate in the force structure. Cutting O&M will be difficult while U.S. forces are still in Iraq, fighting hard in Afghanistan and supporting operations in Libya, Yemen and the Horn of Africa. Defense entitlements have resisted the efforts of the last two Secretaries of Defense to rein them in.
As a result, there will be no choice but to reduce personnel and cut force structure. Bluntly put, DoD’s personnel costs are out of control. In addition, according to the Defense Business Board (DBB), there are some 300,000 uniform personnel currently in positions that should be performed by civilians, really by private contractors. A lot of people can be cut from defense agencies, headquarters staff and support operations. The average cost of military personnel has ballooned to $160,000 a year, according to the DBB, more than twice the average cost of workers in the private sector. The savings to be achieved here from personnel cuts could be extremely significant. So reductions in end strength for the military are coming.
As DoD confronts the need to cut costs while still maintaining a premier military, one area where it may want to consider increasing its investments is information technology (IT). The impact of personnel cuts, particularly in support functions, can be addressed, in part through increased use of IT. Strategic investments in IT can increase the productivity of the DoD workforce. Smart investments in enterprise resource planning (ERP) systems, automated processes and supply chain tracking has significantly enhanced the performance of organizations such as the Defense Logistics Agency, Army Materiel Command and U.S. Transportation Command. But more could and should be done.
This same approach could be applied more broadly across the entire federal government. According to data from the Bureau of Economic Analysis, federal workers’ average pay and benefits hit $123,049 in 2009 while private workers made $61,051 in total compensation. So cutting immediately produces a significant savings, some of which can be invested in IT to maintain or even improve performance. In addition, according to government statistics, some 50,000 of those $120,000 a year workers retire every year. Simply not replacing them would save $6 billion the first year, $12 billion the second and so on. Even if just half this amount were reinvested in IT capabilities, this would result in improved performance and cost savings.
The poster child for reducing personnel and increasing the use of IT is the United States Postal Service (USPS), which is on its way to losing $3.5 billion this year. According to recent reports the service is considering cutting 120,000 staff, closing thousands of local post offices and cancelling Saturday mail delivery service. The USPS has invested in automation but much more could be done in this area to improve efficiency.
One way the military can make up for the impact on future operations of reductions in force structure is by increasing investment in so-called enablers. One of the most effective enablers is ISR. The deployment of thousands of unmanned aerial vehicles has fundamentally changed military operations. The problem is that the amount of information being gathered and transmitted has exploded well beyond the ability of analysts to process what is available. Investments in software processing capacity, data fusion, automated object recognition capabilities and visualization techniques are needed to exploit the information that ISR systems are vacuuming up. Similarly, investments in advanced networking and communications capabilities could significantly improve the combat effectiveness of tactical units. The Army’s Network Integration Exercise (NIE) is demonstrating the value of a robust IT network of both commercial and purpose-built systems.
The Pentagon has the opportunity to deal with the inevitable budget cuts in a smart way. In fact, it could lead the way for the rest of the federal government. One way of continuing to be the world’s best military is by exploiting the opportunities resident in the ongoing IT revolution.
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