Mackenzie Eaglen @MEaglen
April 19, 2016 | American Enterprise Institute
http://www.aei.org/publication/framing-a-defense-reform-agenda-for-2017/
Key Points
The Pentagon’s two civilian workforces now outnumber the active duty military. Meanwhile, the military alone continues to shrink, but Pentagon management still lacks the requisite information and authorities to shape any workforce smartly.
Even though the Pentagon spends more on contractors for services than on weapons, previous defense reform efforts have overwhelming focused on how the department buys equipment, leaving the purchases of services and this contractor workforce grossly lacking in oversight and accountability.
Strategically right-sizing all the Pentagon’s civilian and military workforces will require better data collection, expanded modern management authorities, and sustained political support from the next secretary of defense and the 115th Congress.
Just as Congress updated military retirement options, the military health care system must be modernized to give the 80 percent of the force who do not serve a full career better lasting value, choice, and flexibility.
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Defense reform has been a primary focus for Congress over the last two years, and 2016 is no different. The combination of sustained advocacy for change and a defense budget drawdown has driven higher interest in ongoing structural repair at the Pentagon. In Congress, the House and Senate Armed Services committees have embarked on a comprehensive agenda spearheaded by the most ambitious defense acquisition revamp since the late Clinton era, an unprecedented transformation of the military retirement system, and the first reconsideration of Goldwater-Nichols since its passage in 1986.
The latest efforts at reform, however, did not begin with Congress. In 2010, the Quadrennial Defense Review Independent Panel, a bipartisan, blue-ribbon commission, called for a comprehensive overhaul of the all-volunteer force, including a presidential commission to review the pay and benefits of US military personnel and revise the arcane career system for those in uniform. In 2011, then Secretary of Defense Robert Gates launched a limited set of “efficiency initiatives” aimed at reducing overhead in back-end offices and management.[1] Then in 2014, the National Defense Panel wholly endorsed structural defense reform, stating that “the Secretary [of Defense] cannot be expected to reform the Department without cooperation and support from the political authorities to whom he answers.”[2] Presidential candidates soon joined in. Former presidential candidate Jeb Bush penned op-eds in prominent defense outlets supporting robust defense reform,[3] and the plurality of the Republican field—including Donald Trump, Ted Cruz, John Kasich, Marco Rubio, and Carly Fiorina—has expressed a desire to rebuild the military while also changing the way the Pentagon does business.[4]
Given this frenzy of activity and the likelihood that defense reform will top the next secretary of defense’s agenda, it is important to take stock of current reform efforts and redirect policymakers’ attention to equally important but underappreciated areas in need of reform: (1) the two unchecked defense civilian workforces—one in-house and the other contracted out; (2) defense contracting for services (not weapons systems); and (3) the military health care system.
Particularly in the areas this report addresses, improvements in efficacy are the most important goal, even more so than cost stabilization. This report is intended to sketch out the challenges and opportunities of achieving both in each of the aforementioned areas, not to provide detailed or precise solutions. Understanding and agreeing on the scope of change required (or not) is a prerequisite to identifying specific recommendations for change in the future.
These areas are complex, opaque, and prone to inertia—even in comparison to the labyrinthine weapons acquisition system. Providing clarity about the trade-offs inherent in various options and redirecting efforts toward lasting and sustainable reform will sharpen the debate about improving cost and effectiveness at the Pentagon.
None of these reforms will be politically or bureaucratically easy. Leaders can continue on the current path, paying attention to only weapons acquisition—even though the Pentagon now spends more on services contracting than on equipment each year. Policymakers can avoid addressing military health care, privileging our sacred contract to support America’s service members even at the expense of our second sacrosanct contract—providing them with cutting-edge equipment so they will never be in a fair fight.[5] The Pentagon can continue down the “groundhog day” approach to the two defense civilian workforces, paying lip service to change with minimal across-the-board reductions every few years that mysteriously evaporate over time and fail to unleash the power of decentralized management.
Or, Congress and Pentagon officials can begin the hard work of the next era of defense reform. Such an effort will require sustained leadership from the next secretary of defense, continuous engagement and courage by Congress, and political support from the 45th president of the United States.
Right-Sizing the Defense Civilian Workforces. Two complementary problems exist in Department of Defense (DoD) workforce management, particularly regarding its two armies of civilians: (1) federal defense civilians, and (2) private-sector defense contractors. First, the existing data collection and analysis do not give senior decision makers enough clarity and granularity to identify specific imbalances in the strategic workforce mix. Second, even if policymakers identify a laundry list of imbalances, they often do not have the tools necessary to rectify problems. Significant opportunities exist to better align certain Pentagon positions with the strengths and weaknesses of its workforce components: uniformed military personnel, federal defense civilians, and defense civilian contractors in the private sector.
The defense civilian workforce of more than 744,000 personnel is bloated in some areas yet stretched thin in others. Cyclical efforts at across-the-board reductions in headquarters and back-end support offices are the management equivalent of whack-a-mole. Without the ability to holistically consider all elements of each defense workforce and how they interrelate, a centralized defense leadership is forced to resort to crude sizing and shaping techniques. Human resources and management professionals lack the authorities to right-size the civilian workforce to accommodate changing demands in both the amount and type of civilian support needed.
Shining a Light on the Operations of Civilian Contractors. By contrast, achieving even the minimal transparency of the civilian workforce is currently impossible for the workforce of services contractors, which likely boasts more than 700,000 personnel in addition to the 744,000 federal defense civilians. In 2015, the Pentagon spent $130 billion buying weapons and hardware and $144 billion buying services or labor. Services contractors essentially cover everything the Pentagon pays for outside of weapons, uniformed military personnel, and civilians—think mostly logistics, administrative, and financial support. Recently retired Air Force acquisition chief William LaPlante captures it best: “I jokingly say knowledge-based services should just be called ‘stuff.’”[6]
Private-sector contractors provide all of this, but no one knows how many the Pentagon actually employs. The number of contractors is very likely north of 700,000, but the services contractor data that the Pentagon provides are so fundamentally deficient that even the department itself cannot do more than establish a large range of possible workforce sizes—let alone derive any insights about trends in the growing services contractor portfolio. This is completely unacceptable to taxpayers and warfighters alike given the squeeze on modernization. As I wrote in a July 2015 Wall Street Journal editorial, “Spending on services grew to 53% of all purchases in 2014 from 40% in 2010—even as the total defense budget dropped more than 20% over the same period.”[7]
Modernizing the Military Health Care System. Military health care reform does not suffer from the same type of fundamental challenges that arise in managing the two separate defense civilian workforces and operations. Rather, changes in military health care face a deep-seated political problem: proponents of adjustments are accused of breaking faith with the troops in a selfish effort to only save money, and they do themselves no favors by failing to argue that improving health care access and outcomes is equally important in driving down costs. Yet as the 2014 National Defense Panel noted, military health care reform is needed—just as an overhaul of America’s national health care system and entitlements is needed.[8]
Policymakers incorrectly believe that health care cost savings can be achieved with mere efficiency initiatives and corralling of waste. In reality, the only way to arrest the rapidly expanding cost of military health care is to reduce benefits. Like military retirement reform, advocates for change have to accept upfront that cost savings are likely to be minimal and of secondary import to recipients and policymakers alike.
A Pentagon Civilian Workforce Custom Built to Need
While reform has moved forward in acquisition and innovation, structural and compositional changes in the two defense civilian workforces remain stalled. The Pentagon currently employs 744,000 federal civilian employees in all manner of jobs, but particularly in the management and purchasing processes. (It also pays the salaries of more than 700,000 civilian contractors who primarily perform services for the Defense Department. This workforce is addressed further in the next section.) While federal defense civilians form the backbone of the Pentagon’s day-to-day operations, an unnecessarily large civilian workforce is detracting from the Pentagon’s raison d’être: the production and employment of hard combat power in the service of deterring and winning wars.
Yet these defense civilians do perform crucial functions and must be realigned with care. Hiring freezes and across-the-board reductions at headquarters and agencies, such as the effort announced in March 2016, simply give the appearance of action while lowering morale.[9] In certain cases, enduring right-sizing efforts may actually be achieved by better aligning billets with the strengths and weaknesses of each of the Pentagon’s separate workforces: uniformed, civilian, and contractor.
The Pentagon must endeavor to learn from the major mistake of the 1990s drawdown—laying off junior and low-paid blue-collar workers to ostensibly meet personnel reduction goals without commensurately cutting spending on duplicative positions in the white-collar ranks.[10] To transcend inefficient across-the-board reductions and attract new talent, Pentagon civilian workforce reform must empower management to fundamentally reshape the 1950s-era personnel system currently in place, and it must move beyond temporary billet or budget reductions by reducing the real workload of the department.
Following the Cold War’s end, the Pentagon civilian workforce underwent a dual-pronged drawdown: partially a natural result of the general military drawdown and partially due to a concerted shift toward “outsourcing,” or private-sector civilian contracting support for jobs previously performed by those in the military. As a result, the drawdown of Pentagon civilians in the 1990s largely mirrored the downsizing of the active duty American military, as was appropriate. By contrast, the recent military drawdown following Iraq and Afghanistan has not been accompanied by a commensurate shrinking of either the Pentagon civilian or contractor support bases—despite attempts to begin doing so by the last four secretaries of defense, who appeared to want to begin addressing the need.
The Pentagon has tried department-wide reductions often enough that leaders should understand the futility of arbitrarily imposed workforce cuts, such as the 20 percent reduction in management headquarters spending ordered in 2013.[11] The result was a defense civilian workforce that trended upward after the defense downturn began in 2011. (See Figure 3.) That is because yearly efforts to reduce headcount are largely fruitless without corresponding base closures. Absent a new base closure round in which tens of thousands of jobs shift—as opposed to hundreds to thousands annually in a typical year—the defense civilian workforce has remained static at about 744,000 personnel since the military drawdown began in 2011. By contrast, the active duty military has lost 128,000 service members over the equivalent time period, an 8.5 percent reduction.[12]
Because trends in congressional composition and process do not augur well for increased budgetary stability, the Pentagon and Congress must move away from occasionally considering the strategic workforce mix and toward applying sustained, modern business management techniques that allow the Department of Defense to manage its workforces more successfully. The ubiquity of management authorities across the entire federal civilian workforce can no longer suffice. While the Department of Agriculture or Department of Commerce can afford such inefficiencies, the Department of Defense cannot. This will require members of the congressional defense committees to work more closely with their government oversight committee member counterparts to carve out newer and stronger defense-specific authorities, rules, and regulations.
Nor should Pentagon staff adjustments move ahead exclusively to save money. Case in point: the Senate Armed Services Committee and numerous witnesses in the committee’s 12-hearing Goldwater-Nichols information-gathering effort repeatedly highlighted consolidating regional combatant commands to arrest higher spending on support personnel. There are instances of duplication—perhaps the intelligence and logistics functions at certain combatant commands, for instance, but not that many people work in these offices. Any potential “savings” by merging the US Africa and European Commands, for example, pale in comparison to the value of expertise gained by Africa Command over the past eight years. Additionally, recall the disestablishment of Joint Forces Command (JFCOM), which simply ended with JFCOM personnel largely transferring to the Joint Staff and tripling the size of that office in only a year.[13] These and related downsizing moves represent a fraction of the efficiencies possible in the Pentagon’s back-end support system, or the so-called “Fourth Estate.”
A more important reason to realign each of the defense workforces is that the current distribution of work among military personnel, defense civilians, and civilian contractors is not optimized. In 2013, the Congressional Budget Office (CBO) conducted a study to examine the cost-effectiveness of replacing military personnel performing noncombat support functions with Pentagon civilians.[14] The team found that a wartime insourcing initiative managed to replace 48,000 military personnel performing commercial functions with about 32,000 civilians—and maintain end strength all the while.[15] In the past year, both the CBO and Defense Business Board have highlighted and criticized the number of military personnel still conducting commercial functions at the Pentagon. The CBO estimated that 340,000 active duty military personnel worked in commercial positions in 2012,[16] while the landmark Defense Business Board study concluded that in 2015, 298,000 military personnel worked in the six “core business functions,” such as accounting, property management, and day-to-day noncombat logistics.[17]
The CBO study estimated that insourcing another 80,000 military positions to civilians would save $3.1 billion per year at a 1:1 replacement, or $5.7 billion at a 1:1.5 ratio.[18] Using federal defense civilians for certain jobs costs less over the long term, owing to the generous deferred and in-kind salary and benefits package of military personnel and reduced training requirements for civilians in certain occupational areas.[19]
A massive impediment to right-sizing the defense civilian workforce is the unwillingness of Congress to allow for a new round of base closures (BRAC), despite growing support from the communities likely to be affected by a new BRAC round (Figure 5).[20] In the 2016 National Defense Authorization Act (NDAA), House Armed Services Committee Chairman Mac Thornberry (R-TX) succeeded in his effort to open the door to a new BRAC round by requesting a full infrastructure study from the Department of Defense, delivered to Congress this month.[21] The Air Force and Army estimate that they currently carry 32 percent and 33 percent excess infrastructure, respectively.[22] Without a new base closure round, it will remain difficult to streamline the workforce at these facilities.
As Conrad Crane and John Bonin recently argued, the defense civilian workforce responds to the Pentagon’s real workload; arbitrary percentage cuts therefore only “mow the grass,” so to speak.[23] The true bureaucratic solution to the department’s sprawling, unconstrained staff is not the bureaucratic equivalent of a lawn mower or weed killer. In the absence of base closures, the Pentagon should solve this problem by pruning—empowering management to making intelligent, informed, and effective personnel choices.
The 2016 NDAA did take steps in the right direction on civilian workforce issues, although a generalized across-the-board headquarters reduction remains the flagship attempt currently underway. A similar one launched by Secretary of Defense Chuck Hagel received initial mixed reviews, and subsequent examination of personnel data casts doubt on how closely the implementation mirrored the original proposal.[24]
Additionally, Section 346 of the 2016 NDAA calls for a $10 billion reduction in headquarters, administrative, and support activity spending from 2015 to 2019.[25] The ancillary requirement of a 25 percent decrease in headquarters staff counts toward that target. Deputy Secretary of Defense Robert Work responded to this push by ordering a 25 percent constraint placed on appropriations from 2017 to 2020 for all major headquarters activities—including the Office of the Secretary of Defense, the Joint Staff, and defense agencies—to meet congressional intent.[26] In anticipation of the Pentagon’s rapid move to comply, Congress credited DoD with headquarters savings in the FY16 omnibus appropriations bill, although it also asked for a new DoD inspector general report to examine defense civilian salaries and deliver recommendations on how the department could better measure overall civilian compensation expenses.[27]
Yet topline appropriations decreases do not effectively shape any workforce. A department that yearly decries the foolishness of potential across-the-board sequestration cuts should not then turn around and apply across-the-board cuts to the defense civilian workforce.
Some progress was made in Section 1101 of the 2016 NDAA, which moves toward allowing Pentagon management to terminate employees based on performance, a long-standing demand by senior leaders.[28] Section 1105 extends the “probationary period” before civilians are hired to two years and allows military departments to extend probationary periods indefinitely. This change will allow managers more time to assess new hires in different positions and extend their authority to easily fire poorly performing employees for another year.[29] Section 1106 complements the extended probationary period by placing conditions on the automatic periodic pay increases that Pentagon civilians receive.[30]
Moving beyond such annual incremental fixes will require a serious effort to empower DoD management, which would look something like the Title 5 reform proposed in the August 2015 Force of the Future draft from Brad Carson’s personnel office.[31] These additions would augment the Voluntary Separation Incentive Pay and Reduction in Force authorities that the bipartisan 2014 National Defense Panel recommended for Pentagon management,[32] the latter of which Congress granted the department in the 2016 NDAA.[33]
Additionally, Congress should consider implementing successful personnel management and retention policies, such as standardized exit surveys and the Navy’s busywork-killing Reducing Administrative Distractions program.[34] Rather than focusing on fancy new weapons technologies in its outreach to Silicon Valley, the Pentagon would do well to study the Valley’s back-end support to address the Pentagon’s outdated business practices, such as bespoke accounting and management systems.[35]
Talented people are not dissuaded from working for the Pentagon because they lack the patriotism of earlier generations. They are dissuaded because the Pentagon’s personnel system is stuck in 1955, despite the fact that the Military Compensation and Retirement Modernization Commission (MCRMC) noted a “fundamental mismatch” between the current Pentagon workforce and the department’s personnel management structure.
A warning: such reform will face backlash from several quarters, most notably the American Federation of Government Employees union.[36] Given the opposition of each interest group to specific changes, moving toward a properly balanced Pentagon civilian workforce must be a holistic effort considering all defense workforces in tandem and their corresponding workloads.[37] Even given the additional authorities described earlier, management will find its hands largely tied absent a new base closure round. To harmonize defense civilian workforce realignment with similar efforts in the civilian service contractor workforce, the deputy chief management officer position should act as a backstop to prevent the bureaucratic trickery wherein positions deleted in one group show up in another—rendering personnel changes akin to squeezing a balloon.
Pentagon Services Contractors: Lots of Spending, But Little Oversight
The Pentagon’s difficulty in achieving acquisition reform of weapons purchases is as old as time immemorial, but it has recently been brought into focus because of a budget drawdown that resulted in significantly decreased weapons procurement and an accelerating loss of US military technological advantage. Constant outrage about weapons cost growth has led to sustained attention on acquisition reform for decades, with three attempts during the Obama administration’s tenure alone: Congress’ 2009 Weapons System Acquisition Reform Act (commonly referred to as the “Levin-McCain bill”), the Pentagon’s internal three-part Better Buying Power improvements, and a joint acquisition system retooling push by Armed Services Committee Chairmen John McCain (R-AZ) and Mac Thornberry in the 114th Congress.
But all of this extensive acquisition reform was nearly exclusively focused on weapons, not services, even though the Pentagon buys more of the latter than the former. Hiding amid all these efforts is a $150 billion budgetary equivalent of a black hole: purchasing of services by the Pentagon. As noted earlier, these services contractors are private-sector civilians who provide back-end support for the Pentagon in addition to the federal defense civilian workforce. The spending on the provision of labor, or services, is not ignored in the conversation on modernizing the Pentagon’s business processes because it is politically convenient to do so; rather, no one knows where to begin. In most areas of Pentagon inefficiency, researchers have determined the problem, devised solutions, and spent years trying to implement those solutions.
In services contracting, however, there is not yet even a determination of the problems beyond a realization that these expenditures have grown worryingly large and remain lacking in adequate insight or accountability. Without an ability to marshal facts and figures to support a case for right-sizing the services contractor workforce, Congress and outside experts are left trying to nail Jell-O to the wall. As I wrote in a Wall Street Journal editorial in July 2015, “Because the Pentagon cannot adequately manage this unaccountable army of contractors, it ends up shortchanging the military.”[38]
The main problem is that the budgeting for the purchasing of services is very poorly treated in terms of tracking and data. In 2014, then-Assistant Secretary of the Air Force for Acquisition William LaPlante stated:
I jokingly say knowledge-based services should just be called “stuff” . . . because the way we categorize it, it can contain everything from a plasma physicist helping on the re-entry of a Minuteman missile, to designing a building, to helping with a view graph presentation. It’s all real work, but we’ve got to get more precise on how we classify these things.[39]
A stroll through the existing dataset of contracts for services shows everything from fuel and facility maintenance to basic IT support, financial administration, and logistics. As the January 2015 report by the Defense Business Board revealed, an overwhelming concentration of contractors work on the Pentagon’s core business processes: human resources, health care, financial flow, supply chain and logistics, acquisition, and property management. In recommending a fundamental rethink of the department’s day-to-day operations, the Defense Business Board determined that the services contractor workforce presented the largest savings (about $36 billion) in spending and personnel over five years, nearly double even the projected savings from the Pentagon’s federal civilian workforce.[40]
Essentially, anything the Pentagon buys that is not a weapons system or piece of equipment falls under the category of “services,” which has overtaken the purchasing of vehicles, aircraft, ships, and other hardware over the past five years.[41] From 2012 to 2014, services acquisition rose from 51 percent to 55 percent of the total acquisition budget as weapons procurement commensurately dropped. Only in 2015 did services contracting fall back modestly to 53 percent. As deputy Pentagon acquisition chief Alan Estevez said last year:
We spend more on services than we spend buying what people think of as direct combat capability. . . . I’m spending that $155 billion dollars without the same level of oversight and scrutiny that is performed when I am buying things.[42]
Worse yet, identifying the trends in employment within this type of spending is impossible—even though, by definition, it is labor (read: people) intensive. Wildly varying assumptions about the cost of an average full-time equivalent (FTE) services contractor could leave the workforce at anywhere from 653,000 (assuming each FTE costs $220,000) to 736,000 (assuming each FTE costs $192,000) in 2015. While spending on services has declined from 2014 to 2015 along with the total defense budget, it remains highly doubtful that the workforce has shrunk commensurately with the military’s drawdown. Cue Chairman McCain’s response in an early April 2016 hearing: “We look forward to the day you can tell us how many contractors are employed by this department [DoD]. That will be one of the most wonderful days of my career.”[43]
The reason why little oversight or scrutiny of services contractors exists demands some backstory. In 2008, near the height of supplemental wartime spending, Congress finally began to impose needed oversight on the Pentagon’s services spending portfolio. Congress required the Pentagon to forward an annual inventory of contracted services (ICS) that also contained an estimate of contractors employed by the department, and the Pentagon has attempted to do so since 2009.[44]
Congress has all this data, yet has done little to rein in services contracting spending. That is because the data provided to Congress by the Pentagon are so poorly captured and classified, so ethereal in their standards, that deriving insights and conclusions from the dataset is nigh impossible.
An analysis of the existing ICS datasets reveals that comparisons cannot be made on a year-over-year basis because the Pentagon changed its accounting and classification standards so frequently. Often, defense leaders do this to obscure or gloss over bad news. It is a well-known method in policy and strategy documents for the Pentagon to change its classification and counting systems. For example, in the last four Quadrennial Defense Reviews (2001, 2006, 2010, and 2014), the Air Force switches between counting squadrons, wings, and wing-equivalents of different sizes. Despite the constant reclassification, the decline in actual fighter aircraft has been well-documented by independent investigations.[45] Congress should consider mandating standardized data at this point to stop the blatant obfuscation of oversight.
The congressional watchdog Government Accountability Office has issued no less than 13 reports addressing services acquisition, including eight reports that specifically addressed shortfalls in data collection and the Common Contractor Manpower Data System.[46] Additionally, the current contracting dataset’s inability to extend into the past means that the Pentagon cannot understand what happened in the civilian services contractor workforce during the 1990s drawdown—whereas the federal defense civilian workforce was well-documented during that era.
As envisioned by Congress, the inventory of contracted services should serve as a complementary dataset to help lawmakers and staff understand trends and shortcomings in the Pentagon’s services enterprise and legislate accordingly. Without better situational awareness of the services acquisition sector, Congress remains unable to consider appropriate bold steps to assist the Pentagon in wrangling with the problem or even to conduct robust oversight of this $150 billion pot of money. Amid the general congressional silence on this topic, even engaged offices are reduced to asking for better data, such as the acerbic note by Senator Claire McCaskill (D-MO) that said “there are four independent CMRA [FTE tracking] systems being used by 32 components, which in 2012 left $58 billion of $187 billion in service contract obligations unreported.”[47]
The fundamental shortcoming of the Pentagon’s services contractor dataset is that it does not actually link real numbers of personnel to real work completed, despite its listing of every services contract signed. Additionally, this inventory list does not include classified contracts or accurately track contracts for inherently governmental functions or activities closely associated with inherently governmental functions.[48]
In response to growing criticism from Congress and outside experts of services contracting run amok, acquisition chief Frank Kendall launched a moderate and overdue attempt to wrangle with services spending in January. This new plan engages in the classic government response to problems—more bureaucracy—by creating new positions to oversee certain services acquisition sectors, to be appointed by Kendall. It is not the right solution. While the new functional domain experts will provide much-needed expertise, their role in developing metrics for functional services contracting areas could complicate plans to standardize data across the department. Similarly, the new Services Requirement Review Board simply adds reporting requirements.[49] And yet the fundamental data problem remains unaddressed by this “solution.” Congress will have to take the lead in more stringent accountability and eventual reform of the 700,000-large workforce of services contractors employed by the Pentagon and their workload.
On the other hand, the plan takes the sensible step of devolving authority for services contracts worth more than $1 billion to the relevant service acquisition chiefs, which could improve accountability for large contracts. In time, the demonstrated interest of Chairman Mac Thornberry in applying a Nunn-McCurdy cost breach notification regime to large services contracts may add pressure to set goals and adequately monitor billions of dollars of spending,[50] such as the recently opened $17.5 billion contract to provide global IT services for the military.[51]
To augment Kendall’s attempts, the secretary of defense should designate the deputy chief management officer to oversee baselining and standardizing of the services contracting data with a set deadline and prevent reclassification in successive years to allow a common picture to emerge. If necessary, Congress could re-legislate this requirement, although it may have to waive data reporting requirements for a year to allow the Pentagon to fully take stock of the dataset’s shortcomings. Such a requirement could also demand time limits on establishing an office to conduct implementation of common contract manpower data systems, given that the plans to do so were approved almost two years ago.[52]
Congress could also demand a more useful strategic biennial workforce plan that explicitly addresses services acquisition.[53] A 2012 Defense Acquisition Journal article makes the case that the services contractor workforce is large enough and skilled enough to meet current requirements. Instead it recommends that the services acquisition leadership focus on filling existing billets and providing appropriate, relevant training to acquisition personnel that addresses the most commonly used contract vehicles and immerses staff in the unique characteristics of regional acquisition environments.[54]
As the Pentagon pursues outreach to Amazon and others on cloud-based email management,[55] it might also profit from exploring a partnership in inventory management. Secretary Carter’s recently created Defense Digital Service could help bridge the divide between the Pentagon’s outdated core business processes and the rapidly innovating commercial sector.[56]
Much like DC’s Metro system, large, long-term fixes will be difficult without shutting down part of the reporting system to sit down with those responsible for the purchases of services and consider the problem anew. Indeed, the Defense Business Board report recommends fully benchmarking, optimizing, and renegotiating current services contracts, even as new standards are applied to new contracts moving forward.
The report calls for nothing less than a “revolutionary” change in how the Pentagon conducts its core business processes to move from a centralized Soviet-esque system to a modern organizational structure that properly incentivizes productivity, efficiency, and innovation instead of regulatory compliance and bureaucratic inertia. Implemented fully, the board estimated these changes could save $125 billion over five years, largely through incentivizing the military branches themselves to reduce unnecessary services spending in exchange for greater readiness and procurement funding.[57]
Pentagon leadership looking for inspiration on how to implement these changes should turn to the weapons acquisition fixes passed in the 2015 defense policy bill, which largely focus on decentralizing management authority and accountability to unleash the talents of the defense contracting workforce and increase the input of local leadership.
Because the shadow workforce of civilian contractors performs many of the same tasks as federal defense civilians, any attempt to shape either workforce will wither on the vine if not performed in concert with an attempt to shape the other. As with defense civilians, significant political constituencies both within and without the Pentagon will resist change. As such, a fundamental transformation of the Defense Department’s services contractors workforce necessitates the personal interest of the next secretary of defense and a stated willingness to work with nontraditional partners in the business community.
Modernizing Military Health Care: Better Service and Value
As Pentagon and Hill leaders seek to bring the Defense Department’s human resources management systems into the 21st century through efforts such as military retirement reform and select Force of the Future initiatives, more must be done to make all major military benefits portable for the 80 percent of the US military who do not serve a full career. This benefit portability should include health care.
The rationale for updating the military’s pension and making it more like a 401(k) was precisely to give the vast majority of those who enlist for only one or two tours access to a new benefit that they deserved, but did not receive before. Those same service members should exit the military with the ability to have a “rucksack” of benefits to take along, including a flexible variation of access to Tricare, the military health care system.
This is a correct and overdue push to meet the demands of a changing recruiting pool in which most service members are or will be married, youth are increasingly mobile and diverse, and quality in the ranks remains high, meaning competition for talent with the private sector will remain fierce. As noted by the Military Compensation and Retirement Modernization Commission (MCRMC), current service members are more educated and skilled, a higher percentage are female or have children, and usage of the reserve components has risen drastically since the inception of the current human resources system used by the Pentagon.[58]
Focusing on the quality of the benefit provided and educating its recipients about this are important, as the cost of military health care is growing alongside the beneficiary pool, yet contributions are not keeping pace. Tricare for Life imposes almost no costs on its beneficiaries, and working-age retirees enrolled in Tricare Prime enjoyed almost two decades since the establishment of Tricare without significant increases in cost sharing from 1996 to 2012. The share of health care costs paid by working-age retirees dropped from an average of 27 percent in 1996 to only 11 percent by 2012,[59] but the first cost sharing increase—an enrollment fee for those retirees using Tricare Prime—did not occur until 2012.[60] All this despite the fact that, per the Congressional Budget Office, “between 2000 and 2012, funding for military health care increased by 130 percent.”[61] Absent change, the percentage of the defense budget devoted to health care will continue to grow while the shortcomings of today’s military health care system remain.
Policymakers face two challenges as they begin to consider changes to the military health care: (1) cost-effectively expanding the number of beneficiaries and their access to and quality of care; and (2) ensuring cutting-edge military medical readiness in war and peacetime. These two objectives are sometimes complementary; at other times, they clash. For instance, the readiness mission requires a heavy caseload of trauma surgery and anesthesiology, while pediatrics and obstetrics are a primary demand by families in the provision of care to Tricare beneficiaries.[62] Balancing the two missions is critical for any attempt to make the military’s health care system more effective.
The Military Health System (MHS) and Defense Health Agency are tasked with providing access to care for military service members and their dependents and ensuring the readiness of medical military personnel. In 2015 (the latest data available), approximately 9.5 million people were eligible for some form of Tricare, with 56 percent of those being military retirees and their family members.[63]
The MHS has three major sections. Tricare Prime, the most subsidized portion of the MHS, serves active duty personnel, their families, and enrolled working-age military retirees and their families.[64] Tricare Prime is relatively cheap, but allows the health recipient limited choices about where and from whom to get care. A significant portion of Prime expenditures occur at Military Treatment Facilities (MTFs), which are run by the military itself.
Tricare Standard and Tricare Extra serve current service members and their families in additional to Medicare-eligible service members and their families. These programs are more expensive, but they give recipients a larger amount of flexibility in choosing providers. Lastly, as of 2002, Medicare-eligible military retirees can have their medical costs fully defrayed through the Tricare for Life program.
In considering the provision of care to Tricare beneficiaries writ large, erstwhile discussions about “military health care reform” have focused largely on defining a balance between the cost of care and the degree of subsidy that military service members and their families “deserve.” These arguments are largely subjective. As University of Michigan Professor Mark Fendrick recently phrased it in testimony to the Senate Armed Services personnel subcommittee: “People frequently ask me whether the amount of cost sharing faced by Tricare members it too high, too low, or just right. The answer, of course, is ‘it depends.’”[65]
The military health care system’s structural problems in some ways mirror those of private-sector health care; the 2014 National Defense Panel went so far as to explicitly link the two.[66] Yet certain health care challenges are also unique to the military—what civilian analogue exists for the mental health needs of a drone operator who pulls the trigger every day before returning home to his family for dinner?[67]
Over the past two years, Congress, the Department of Defense, and outside groups have wrangled over potential responses to the shortcomings of the military health care system identified above. The opening shot in this discussion occurred when the congressionally mandated MCRMC released its report in January 2015, as required by Congress. The largest MCRMC recommendations were replacing Tricare with a system similar to the health care plan of federal civilians (a nonstarter in Congress), increasing cost sharing for beneficiaries, and creating new commands to avoid allowing recent advances made by military medics to atrophy over time.[68] Although Congress intends to address military health care in the 2017 defense policy bill, the 2016 NDAA also contained initial changes to the health care system, including authorities to experiment with “value-based care,” which focuses on the subjective value of care to beneficiaries instead of merely tallying up the cost of medical procedures.
The bill also contained a push to increase burden sharing by increasing pharmaceutical copays and incentivizing beneficiaries to use lower-cost mail-order drugs. Why is this important? As I wrote last year:
While brand-name drugs cost four times more than generics at military treatment facilities ($46 vs. $13), they cost 10 times more at retail pharmacies. This is asking the taxpayer to spend $226 versus $22 for the same product simply offered to the recipient differently. About 51 percent of drug costs overall are incurred at retail pharmacies. With 72 percent of recipients using generic drugs currently, the Defense Department lags behind the private sector’s 81 percent generic utilization rate.[69]
Such efforts focusing on the health care system’s incentive architecture could profitably be used in dozens of other areas. For instance, the 2016 NDAA also created a three-year pilot program to allow Tricare beneficiaries to use urgent-care facilities without authorization, because the inability to do so may be driving over usage of expensive emergency-room visits.[70] What once looked like an intelligent, centralized decision—placing a barrier between beneficiaries and expensive urgent-care usage—may have actually driven more inefficient behavior.
In other endeavors, the answer may actually be more centralized leadership, such as in streamlining the messy health care budget (as recommended by the MCRMC), mandating medical-specific training for relevant contracting officials, triaging the problem of misaligned usage rates at MTFs,[71] and giving political cover to the military medical community as it tries to maintain its readiness.[72]
The last point—military medical readiness—is critically important. The defense health care establishment must not only provide cost-effective treatment for its recipients, but also train to maintain the readiness of military medical personnel for combat operations.
Trying to balance both missions has proved exceedingly difficult, particularly as the Pentagon’s medical professionals try to figure out how to maintain significant advances in combat care bought at dear cost during the Iraq and Afghanistan wars. As the active duty force has shrunk through the postwar drawdowns and sequestration, retirees increasingly outnumber the combined population of active and reserve personnel in the Pentagon’s health care system. This means that military medical personnel see fewer cases and patients relevant to maintaining their combat care proficiency. Some niche capabilities necessary to keep combat medics and trauma surgeons sharp will surely sail against the budgetary wind in peacetime: Fort Sam Houston’s prosthetics rehab Center for the Intrepid will simply not receive nearly the number of cases it did during the height of Operations Iraqi Freedom and Enduring Freedom.
To better manage its medical readiness, the MCRMC recommended that the Pentagon create a new 4-star Joint Readiness Command with a subordinate medical command and designate a new medical readiness position on the Joint Staff, but the medical community has signaled clearly that it does not want nor need a new bureaucratic layer to manage its readiness.[73] HASC Military Personnel Subcommittee Chairman Rep. Joe Heck (R-NV), a former military doctor, is carefully weighing possible organizational changes alongside more immediate fixes to address military medical readiness in this year’s defense policy bill.[74] No matter what happens in Congress, maintaining certain inefficient yet critical medical capabilities that underpin medical readiness will require, at a minimum, sustained attention by successive secretaries of defense.
Looking toward the next administration and the 115th Congress, changes to military health care would be well-served by considering a conceptual alliance with the Force of the Future personnel system revamp led by Secretary Carter and former Under Secretary Brad Carson. Certainly, increasing the flexibility of the military medical personnel system to allow for training sabbaticals and midcareer entrance by qualified civilian medical personnel could appreciably bolster both the Tricare system and the military medical community. Also, moving from a hidebound, pay-for-procedure health care structure to a value-based, continuum-of-service model would empower beneficiaries to manage care choices, as their private-sector equivalents can.
Finally, greater awareness of the value and quality of this benefit for the beneficiaries is overdue. Tricare recipients pay only 5 percent of every dollar spent on the Tricare system, in contrast to an average private-sector rate of 28 percent.[75] Yet the department’s own survey of beneficiaries showed a 5 to 6 percent gap between civilian benchmarks and Tricare performance,[76] and while the MCRMC’s health care survey highlighted an overall dissatisfaction, incredibly high importance was attached to improving access to and continuity in care.[77] Still, another survey by the Military Officers Association of America indicated that about 75 percent of beneficiaries believed it unreasonable to pay more for current health care options.[78]
It is not a question of whether service members and their families deserve all the benefits they receive, despite reform opponents’ best efforts to tar advocates of reduced health care expenditures as heartless auditors. Nor is it a question of whether the Pentagon spends “too much” on health care. Rather, the future of military health care must focus on a broader question: are beneficiaries and military medical personnel receiving adequate value and quality for the amount of funding obligated to the military health care system?
Reform to Rebuild
While reform is no substitute for adequate, stable defense funding, the political reality is that there is no new money for defense absent continuous “reform” and good governance at and by the Pentagon. Those who seek budgetary redemption in efficiencies and back-end savings will be disappointed.
Looking forward, defense reform must focus as much on improving effectiveness as it does on driving costs down. While the “waste, fraud, and abuse” at the Pentagon is a mere rounding error in the context of overall defense spending, continuously rooting it out serves as a crucial trust-building mechanism for those who wish to rebuild America’s military.
More importantly, structural inefficiencies at the Pentagon detract from generating and sustaining needed combat power. Alarm bells may be ringing about rising costs, but the Pentagon’s arthritic support system also endangers America’s military supremacy.[79] The archaic management structure—both in the uniformed military and the Pentagon more broadly—renders America’s armed forces unable to strategically approach new threats and challenges.
A new Congress and leadership team at the Pentagon in 2017 should focus on these three areas of overdue and underappreciated reform when building a blueprint for governing in the next administration. Each is a complicated effort that will not be solved in just one year. But the benefits of sustained attention and care by policymakers can yield a happier workforce performing a critical mission for the nation along with the potential for some new investment in modernization and innovation.
About the Author
Mackenzie Eaglen is a resident fellow in the Marilyn Ware Center for Security Studies at the American Enterprise Institute, where she works on defense strategy, defense budgets, and military readiness.
Notes
Office of the Secretary of Defense, Track Four Efficiency Initiatives Decisions, March 14, 2011, http://www.acq.osd.mil/dpap/pdi/pc/docs/3-14-2011_Track_Four_Efficiency_Initiatives_Decisions.pdf.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, United States Institute of Peace, July 31, 2014, http://www.usip.org/sites/default/files/Ensuring-a-Strong-U.S.-Defense-for-the-Future-NDP-Review-of-the-QDR_0.pdf.
Jeb Bush, “America Must Lead Against New Generation of Threats,” Military.com, December 29, 2015, http://www.military.com/daily-news/2015/12/29/bushs-view-america-must-lead-against-new-generation-of-threats.html.
Nick Gillespie, “Donald Trump Denounces Wasteful Pentagon Spending, Vows Great Defense with No Additional Spending,” Reason.com, February 8, 2016, https://reason.com/blog/2016/02/08/donald-trump-denounces-wasteful-pentagon; Travis J. Tritten, “Fiorina Steps Ahead of GOP Pack with Specific Military Goals,” Stars and Stripes, September 17, 2015, http://www.stripes.com/fiorina-steps-ahead-of-gop-pack-with-specific-military-goals-1.368656; Alexandra Jaffe, “Kasich: Boost Defense Spending with Reforms, Lose Sequestration,” NBC News, August 31, 2015, http://www.nbcnews.com/politics/2016-election/kasich-boost-defense-spending-reforms-lose-sequestration-n419111; David Graham, “There’s a Reason Ted Cruz Won’t Say How Much His Pentagon Plans Will Cost,” Defense One, February 16, 2016, http://www.defenseone.com/politics/2016/02/theres-reason-ted-cruz-wont-say-how-much-his-pentagon-plans-will-cost/125980/; and “Restoring and Modernizing American Strength,” Marcorubio.com, November 2015.
Mackenzie Eaglen and Michael O’Hanlon, “Military Entitlements Are Killing Readiness,” Wall Street Journal, July 25, 2015, http://www.wsj.com/articles/SB10001424127887324110404578626431535359060.
Jared Serbu, “Inside the DoD Reporter’s Notebook: DoD Drills Down on Service Contracting; A Controversial Decision on Contractor Pay,” Federal News Radio, June 2, 2014, http://federalnewsradio.com/defense/2014/06/inside-the-dod-reporters-notebook-dod-drills-down-on-service-contracting-a-controversial-decision-on-contractor-pay/.
Mackenzie Eaglen, “Cutting Troops But Letting the Civilian Army Swell,” Wall Street Journal, July 23, 2015, http://www.wsj.com/articles/cutting-troops-but-letting-the-civilian-army-swell-1437692640.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, 4.
Aaron Mehta and Joe Gould, “Pentagon Institutes Civilian Hiring Freeze,” Defense News, March 25, 2016, http://www.defensenews.com/story/defense/policy-budget/budget/2016/03/24/pentagon-civilian-hiring-freeze-dod-position-staff-cuts/82221662/.
Mackenzie Eaglen, “Shrinking Bureaucracy, Overhead, and Infrastructure: Why This Defense Drawdown Must Be Different for the Pentagon,” American Enterprise Institute, March 20, 2013, https://www.aei.org/publication/shrinking-bureaucracy-overhead-and-infrastructure-why-this-defense-drawdown-must-be-different-for-the-pentagon-2/.
Office of the Deputy Secretary of Defense, “Carter Memo on Headquarters Reduction,” USNI News, July 31, 2013, https://news.usni.org/2013/08/02/document-carter-memo-on-headquarters-reduction.
President’s Budget Request, Fiscal Years 2010–2017, Green Book Table 7-6, Office of the Under Secretary for Defense (Comptroller).
Eaglen, “Shrinking Bureaucracy, Overhead, and Infrastructure.”
Congressional Budget Office, Replacing Military Personnel in Support Positions with Civilian Employees, December 2015, https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51012-Military_Civilian_Mix_OneCol.pdf.
Ibid, 2.
Ibid, 1.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change, January 22, 2015, 10, 19, http://dbb.defense.gov/Portals/35/Documents/Meetings/2015/2015-01/CBP%20Task%20Group%20Out-brief%20Slides_FINAL.pdf.
Congressional Budget Office, Replacing Military Personnel.
Ibid, 2, 8.
Jared Serbu, “Military Communities on BRAC: Let’s Get On with It,” Federal News Radio, July 6, 2015, http://federalnewsradio.com/defense/2015/07/military-communities-brac-lets-get/.
National Defense Authorization Act for Fiscal Year 2016, HR 1735, 114th Cong., (May 5, 2015): Section 2815, 1128, https://www.congress.gov/bill/114th-congress/house-bill/1735.
Department of Defense Infrastructure Capacity, March 2016 (contained in letter from Deputy Secretary of Defense Robert Work to Chairman Mac Thornberry, April 12).
Conrad Crane and John Bonin, “The Next Task Force Smith: The Danger of Arbitrary Headquarters Reductions,” War on the Rocks, October 27, 2015, http://warontherocks.com/2015/10/the-next-task-force-smith-the-danger-of-arbitrary-headquarters-reductions/.
Stephen Daggett, “Preliminary Assessment of Efficiency Initiatives Announced by Secretary of Defense Gates on August 9, 2010,” Congressional Research Service, August 12, 2010, https://www.fas.org/sgp/crs/natsec/efficiency.pdf.
National Defense Authorization Act for Fiscal Year 2016, Section 346, 157.
Charles S. Clark, “Pentagon Orders Even More HQ Cuts, Infuriating Employees’ Union,” Defense One, September 9, 2015, http://www.defenseone.com/management/2015/09/pentagon-orders-even-more-hq-cuts-infuriating-employees-union/.
Fiscal Year 2016 Consolidated Appropriations Act, HR 2029, 114th Cong., (December 18, 2015): Division C, https://www.congress.gov/bill/114th-congress/house-bill/2029/text.
National Defense Authorization Act for Fiscal Year 2016, Section 1101, 745.
Ibid., Section 1105, 748.
Ibid., Section 1106, 751.
Brad Carson, “Civilian Personnel Reform Proposals,” September 2015, https://www.govexec.com/media/gbc/docs/pdfs_edit/091515cc1.pdf.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future.
National Defense Authorization Act for Fiscal Year 2016, Section 1101, 745.
Tim Kane, “Ash Carter’s Speech: A Beginning, Not a Defeat, of the Personnel Revolution,” Foreign Policy, November 23, 2015, http://foreignpolicy.com/2015/11/23/ash-carters-speech-a-beginning-not-a-defeat-of-the-personnel-revolution/; and Meghann Myers, “Navy Re-Launches Forum for Best Sailor Ideas,” Navy Times, June 15, 2015, http://www.navytimes.com/story/military/2015/06/13/navy-reducing-administrative-distractions-campaign-new-issues-2015/71021746/.
James Hasik, “PowerPoint Guys Versus Bean Counters,” Atlantic Council Defense Industrialist, September 21, 2015, http://www.atlanticcouncil.org/blogs/defense-industrialist/powerpoint-guys-versus-bean-counters.
Charles S. Clark, “Pentagon Plan to Move Civilian Workers Outside the Civil Service System Draws Fire,” Government Executive, September 15, 2015, http://www.govexec.com/management/2015/09/pentagon-plan-move-civilian-workers-outside-civil-service-system-draws-fire/121043/.
Joe Davidson, “Defense Bill Hits Pay and Job Security of Pentagon Employees, Could Set Wider Precedent for Federal Workers,” Washington Post, July 21, 2015, https://www.washingtonpost.com/news/federal-eye/wp/2015/07/21/defense-bill-hits-pay-and-job-security-of-pentagon-employees-could-set-wider-precedent-for-federal-workers/; and Clark, “Pentagon Orders Even More HQ Cuts.”
Eaglen, “Cutting Troops But Letting the Civilian Army Swell.”
Jared Serbu, “Inside the DoD Reporter’s Notebook: DoD Drills Down on Service Contracting; A Controversial Decision on Contractor Pay,” Federal News Radio, June 2, 2014, http://federalnewsradio.com/defense/2014/06/inside-the-dod-reporters-notebook-dod-drills-down-on-service-contracting-a-controversial-decision-on-contractor-pay/.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change.
Government Accountability Office, “DoD Service Acquisition: Improved Use of Available Data Needed to Better Manage and Forecast Service Contract Requirements,” February 18, 2016, http://www.gao.gov/products/GAO-16-119?utm_medium=email&utm_source=govdelivery.
Sydney Freedberg Jr., “Kendall to Overhaul ‘Chaos’ Of Pentagon’s $155 Billion Services Market,” Breaking Defense, June 9, 2015, http://breakingdefense.com/2015/06/kendall-to-overhaul-chaos-of-pentagons-155-billion-services-mess/.
John McCain, remarks at Senate Armed Services Committee hearing on the Posture of the Army, April 7, 2016.
Office of Defense Procurement and Acquisition Policy, “Acquisition of Services Policy,” http://www.acq.osd.mil/dpap/cpic/cp/acquisition_of_services_policy.html.
Mackenzie Eaglen, “Pentagon’s Aviation Plan Headed for a Dead Stick Landing,” American Enterprise Institute, May 31, 2015; Mackenzie Eaglen, “Is America’s Air Force Dying?,” National Interest, May 7, 2014; and “2015 USAF Almanac,” Air Force Magazine, May 2015, 45.
Office of Defense Procurement and Acquisition Policy, “Reports,” http://www.acq.osd.mil/dpap/sa/Learn-More/Reports.html.
Claire McCaskill to Chuck Hagel, July 21, 2014, http://1yxsm73j7aop3quc9y5ifaw3.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/2014-07-21-McCaskill-Letter-to-DOD-re-Contractor-Inventory.pdf.
Government Accountability Office, “DOD Inventory of Contracted Services: Actions Needed to Ensure Inventory Are Complete and Accurate, November 2015.
Scott Maucione, “DoD’s Long-Awaited Policy Streamlines Services Contracting,” Federal News Radio, January 5, 2016, http://federalnewsradio.com/acquisition/2016/01/dod-unveils-long-awaited-service-contract-policy/.
Colin Clark, “HASC Mulls Nunn-McCurdys for Operations & Support Costs,” Breaking Defense, February 3, 2016, http://breakingdefense.com/2016/02/hasc-mulls-nunn-mccurdys-for-operations-support-costs/.
Frank Konkel, “Pentagon Now Taking Bids on $17.5B Encore III Contract for Global IT Services,” Netgov, March 3, 2016, http://www.nextgov.com/defense/2016/03/pentagon-now-taking-bids-175b-encore-iii-contract-global-it-services/126387/.
Government Accountability Office, “Defense Acquisition: Update on DoD’s Efforts to Implement a Common Contractor Manpower Data System,” May 19, 2014, 3.
Biennial Strategic Workforce Plan, 10 U.S.C. § 115b.
Rene Rendon, Uday M. Apte, and Aruna Apte, “Services Acquisition in the DoD: A Comparison of Management Practice in the Army, Navy, and Air Force,” Acquisition Research Journal 19 no. 1 (2012): 24.
Frank Konkel, “The Pentagon’s Next Unclassified Email System May Live in the Cloud,” Defense One, September 22, 2015, http://www.defenseone.com/news/2015/09/pentagons-next-unclassified-email-system-may-live-cloud/121682/.
Patrick Tucker, “Meet the Head of the Pentagon’s Agile New Digital Team,” Defense One, November 18, 2015, http://www.defenseone.com/technology/2015/11/meet-head-pentagons-agile-new-digital-service/123825/.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, January 2015, 14, http://www.mcrmc.gov/public/docs/report/mcrmc-finalreport-29jan15-hi.pdf.
President’s Budget Request, Fiscal Year 2013, Budget Overview, Office of the Under Secretary for Defense (Comptroller), 5-3.
Don Jansen, “Military Medical Care: Questions and Answers.” Congressional Reserve Service, 8.
Congressional Budget Office, “Approaches to Reducing Federal Spending on Military Health Care,” January 2014, 4.
John Whitley, testimony to the Senate Armed Services Subcommittee on Personnel, February 23, 2016, 18.
Defense Health Agency, “Evaluation of the TRICARE Program Fiscal Year 2015 Report to Congress,” February 28, 2015, 14, http://www.health.mil/Military-Health-Topics/Access-Cost-Quality-and-Safety/Health-Care-Program-Evaluation/Annual-Evaluation-of-the-TRICARE-Program.
Ibid.
A. Mark Fendrick, “The Essential Role of Clinical Nuance and Member Responsibility in TRICARE Benefit Redesign,” testimony to the Senate Armed Services Subcommittee on Personnel, February 23, 2016.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, 4.
Matthew Power, “Confessions of a Drone Warrior,” GQ, October 22, 2013, http://www.gq.com/story/drone-uav-pilot-assassination.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, January 2015, 60, http://www.mcrmc.gov/public/docs/report/mcrmc-finalreport-29jan15-hi.pdf.
Jim Talent and Mackenzie Eaglen, “Defense Bill at an Impasse, But a Solution Is Within Reach,” The Hill, July 29, 2015.
National Defense Authorization Act for Fiscal Year 2016, section 725.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, 66.
Ibid., 69.
Jonathan Woodson, testimony to the House Armed Services Subcommittee on Personnel, June 11, 2015, 5.
Patricia Kime, “House Panel Weighs Allowing Civilian Trauma Cases at More Military Hospitals,” Military Times, February 26, 2016.
Lindsey Graham, “The Healthcare Recommendations of the Military Compensation and Retirement Modernization Commission,” testimony before the Senate Armed Services Subcommittee on Personnel, February 25, 2015, 9.
Defense Health Agency, “Evaluation of the TRICARE Program Fiscal Year 2015 Report to Congress,” 39.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission, 88.
Military Officers Association of America, “MOAA’s Tricare Reform Survey Results,” December 4, 2015.
Mackenzie Eaglen et al., “Open Letter: A Defense Reform Consensus,” Politico, April 28, 2015.
April 19, 2016 | American Enterprise Institute
http://www.aei.org/publication/framing-a-defense-reform-agenda-for-2017/
Key Points
The Pentagon’s two civilian workforces now outnumber the active duty military. Meanwhile, the military alone continues to shrink, but Pentagon management still lacks the requisite information and authorities to shape any workforce smartly.
Even though the Pentagon spends more on contractors for services than on weapons, previous defense reform efforts have overwhelming focused on how the department buys equipment, leaving the purchases of services and this contractor workforce grossly lacking in oversight and accountability.
Strategically right-sizing all the Pentagon’s civilian and military workforces will require better data collection, expanded modern management authorities, and sustained political support from the next secretary of defense and the 115th Congress.
Just as Congress updated military retirement options, the military health care system must be modernized to give the 80 percent of the force who do not serve a full career better lasting value, choice, and flexibility.
Read the PDF.
Defense reform has been a primary focus for Congress over the last two years, and 2016 is no different. The combination of sustained advocacy for change and a defense budget drawdown has driven higher interest in ongoing structural repair at the Pentagon. In Congress, the House and Senate Armed Services committees have embarked on a comprehensive agenda spearheaded by the most ambitious defense acquisition revamp since the late Clinton era, an unprecedented transformation of the military retirement system, and the first reconsideration of Goldwater-Nichols since its passage in 1986.
The latest efforts at reform, however, did not begin with Congress. In 2010, the Quadrennial Defense Review Independent Panel, a bipartisan, blue-ribbon commission, called for a comprehensive overhaul of the all-volunteer force, including a presidential commission to review the pay and benefits of US military personnel and revise the arcane career system for those in uniform. In 2011, then Secretary of Defense Robert Gates launched a limited set of “efficiency initiatives” aimed at reducing overhead in back-end offices and management.[1] Then in 2014, the National Defense Panel wholly endorsed structural defense reform, stating that “the Secretary [of Defense] cannot be expected to reform the Department without cooperation and support from the political authorities to whom he answers.”[2] Presidential candidates soon joined in. Former presidential candidate Jeb Bush penned op-eds in prominent defense outlets supporting robust defense reform,[3] and the plurality of the Republican field—including Donald Trump, Ted Cruz, John Kasich, Marco Rubio, and Carly Fiorina—has expressed a desire to rebuild the military while also changing the way the Pentagon does business.[4]
Given this frenzy of activity and the likelihood that defense reform will top the next secretary of defense’s agenda, it is important to take stock of current reform efforts and redirect policymakers’ attention to equally important but underappreciated areas in need of reform: (1) the two unchecked defense civilian workforces—one in-house and the other contracted out; (2) defense contracting for services (not weapons systems); and (3) the military health care system.
Particularly in the areas this report addresses, improvements in efficacy are the most important goal, even more so than cost stabilization. This report is intended to sketch out the challenges and opportunities of achieving both in each of the aforementioned areas, not to provide detailed or precise solutions. Understanding and agreeing on the scope of change required (or not) is a prerequisite to identifying specific recommendations for change in the future.
These areas are complex, opaque, and prone to inertia—even in comparison to the labyrinthine weapons acquisition system. Providing clarity about the trade-offs inherent in various options and redirecting efforts toward lasting and sustainable reform will sharpen the debate about improving cost and effectiveness at the Pentagon.
None of these reforms will be politically or bureaucratically easy. Leaders can continue on the current path, paying attention to only weapons acquisition—even though the Pentagon now spends more on services contracting than on equipment each year. Policymakers can avoid addressing military health care, privileging our sacred contract to support America’s service members even at the expense of our second sacrosanct contract—providing them with cutting-edge equipment so they will never be in a fair fight.[5] The Pentagon can continue down the “groundhog day” approach to the two defense civilian workforces, paying lip service to change with minimal across-the-board reductions every few years that mysteriously evaporate over time and fail to unleash the power of decentralized management.
Or, Congress and Pentagon officials can begin the hard work of the next era of defense reform. Such an effort will require sustained leadership from the next secretary of defense, continuous engagement and courage by Congress, and political support from the 45th president of the United States.
Right-Sizing the Defense Civilian Workforces. Two complementary problems exist in Department of Defense (DoD) workforce management, particularly regarding its two armies of civilians: (1) federal defense civilians, and (2) private-sector defense contractors. First, the existing data collection and analysis do not give senior decision makers enough clarity and granularity to identify specific imbalances in the strategic workforce mix. Second, even if policymakers identify a laundry list of imbalances, they often do not have the tools necessary to rectify problems. Significant opportunities exist to better align certain Pentagon positions with the strengths and weaknesses of its workforce components: uniformed military personnel, federal defense civilians, and defense civilian contractors in the private sector.
The defense civilian workforce of more than 744,000 personnel is bloated in some areas yet stretched thin in others. Cyclical efforts at across-the-board reductions in headquarters and back-end support offices are the management equivalent of whack-a-mole. Without the ability to holistically consider all elements of each defense workforce and how they interrelate, a centralized defense leadership is forced to resort to crude sizing and shaping techniques. Human resources and management professionals lack the authorities to right-size the civilian workforce to accommodate changing demands in both the amount and type of civilian support needed.
Shining a Light on the Operations of Civilian Contractors. By contrast, achieving even the minimal transparency of the civilian workforce is currently impossible for the workforce of services contractors, which likely boasts more than 700,000 personnel in addition to the 744,000 federal defense civilians. In 2015, the Pentagon spent $130 billion buying weapons and hardware and $144 billion buying services or labor. Services contractors essentially cover everything the Pentagon pays for outside of weapons, uniformed military personnel, and civilians—think mostly logistics, administrative, and financial support. Recently retired Air Force acquisition chief William LaPlante captures it best: “I jokingly say knowledge-based services should just be called ‘stuff.’”[6]
Private-sector contractors provide all of this, but no one knows how many the Pentagon actually employs. The number of contractors is very likely north of 700,000, but the services contractor data that the Pentagon provides are so fundamentally deficient that even the department itself cannot do more than establish a large range of possible workforce sizes—let alone derive any insights about trends in the growing services contractor portfolio. This is completely unacceptable to taxpayers and warfighters alike given the squeeze on modernization. As I wrote in a July 2015 Wall Street Journal editorial, “Spending on services grew to 53% of all purchases in 2014 from 40% in 2010—even as the total defense budget dropped more than 20% over the same period.”[7]
Modernizing the Military Health Care System. Military health care reform does not suffer from the same type of fundamental challenges that arise in managing the two separate defense civilian workforces and operations. Rather, changes in military health care face a deep-seated political problem: proponents of adjustments are accused of breaking faith with the troops in a selfish effort to only save money, and they do themselves no favors by failing to argue that improving health care access and outcomes is equally important in driving down costs. Yet as the 2014 National Defense Panel noted, military health care reform is needed—just as an overhaul of America’s national health care system and entitlements is needed.[8]
Policymakers incorrectly believe that health care cost savings can be achieved with mere efficiency initiatives and corralling of waste. In reality, the only way to arrest the rapidly expanding cost of military health care is to reduce benefits. Like military retirement reform, advocates for change have to accept upfront that cost savings are likely to be minimal and of secondary import to recipients and policymakers alike.
A Pentagon Civilian Workforce Custom Built to Need
While reform has moved forward in acquisition and innovation, structural and compositional changes in the two defense civilian workforces remain stalled. The Pentagon currently employs 744,000 federal civilian employees in all manner of jobs, but particularly in the management and purchasing processes. (It also pays the salaries of more than 700,000 civilian contractors who primarily perform services for the Defense Department. This workforce is addressed further in the next section.) While federal defense civilians form the backbone of the Pentagon’s day-to-day operations, an unnecessarily large civilian workforce is detracting from the Pentagon’s raison d’être: the production and employment of hard combat power in the service of deterring and winning wars.
Yet these defense civilians do perform crucial functions and must be realigned with care. Hiring freezes and across-the-board reductions at headquarters and agencies, such as the effort announced in March 2016, simply give the appearance of action while lowering morale.[9] In certain cases, enduring right-sizing efforts may actually be achieved by better aligning billets with the strengths and weaknesses of each of the Pentagon’s separate workforces: uniformed, civilian, and contractor.
The Pentagon must endeavor to learn from the major mistake of the 1990s drawdown—laying off junior and low-paid blue-collar workers to ostensibly meet personnel reduction goals without commensurately cutting spending on duplicative positions in the white-collar ranks.[10] To transcend inefficient across-the-board reductions and attract new talent, Pentagon civilian workforce reform must empower management to fundamentally reshape the 1950s-era personnel system currently in place, and it must move beyond temporary billet or budget reductions by reducing the real workload of the department.
Following the Cold War’s end, the Pentagon civilian workforce underwent a dual-pronged drawdown: partially a natural result of the general military drawdown and partially due to a concerted shift toward “outsourcing,” or private-sector civilian contracting support for jobs previously performed by those in the military. As a result, the drawdown of Pentagon civilians in the 1990s largely mirrored the downsizing of the active duty American military, as was appropriate. By contrast, the recent military drawdown following Iraq and Afghanistan has not been accompanied by a commensurate shrinking of either the Pentagon civilian or contractor support bases—despite attempts to begin doing so by the last four secretaries of defense, who appeared to want to begin addressing the need.
The Pentagon has tried department-wide reductions often enough that leaders should understand the futility of arbitrarily imposed workforce cuts, such as the 20 percent reduction in management headquarters spending ordered in 2013.[11] The result was a defense civilian workforce that trended upward after the defense downturn began in 2011. (See Figure 3.) That is because yearly efforts to reduce headcount are largely fruitless without corresponding base closures. Absent a new base closure round in which tens of thousands of jobs shift—as opposed to hundreds to thousands annually in a typical year—the defense civilian workforce has remained static at about 744,000 personnel since the military drawdown began in 2011. By contrast, the active duty military has lost 128,000 service members over the equivalent time period, an 8.5 percent reduction.[12]
Because trends in congressional composition and process do not augur well for increased budgetary stability, the Pentagon and Congress must move away from occasionally considering the strategic workforce mix and toward applying sustained, modern business management techniques that allow the Department of Defense to manage its workforces more successfully. The ubiquity of management authorities across the entire federal civilian workforce can no longer suffice. While the Department of Agriculture or Department of Commerce can afford such inefficiencies, the Department of Defense cannot. This will require members of the congressional defense committees to work more closely with their government oversight committee member counterparts to carve out newer and stronger defense-specific authorities, rules, and regulations.
Nor should Pentagon staff adjustments move ahead exclusively to save money. Case in point: the Senate Armed Services Committee and numerous witnesses in the committee’s 12-hearing Goldwater-Nichols information-gathering effort repeatedly highlighted consolidating regional combatant commands to arrest higher spending on support personnel. There are instances of duplication—perhaps the intelligence and logistics functions at certain combatant commands, for instance, but not that many people work in these offices. Any potential “savings” by merging the US Africa and European Commands, for example, pale in comparison to the value of expertise gained by Africa Command over the past eight years. Additionally, recall the disestablishment of Joint Forces Command (JFCOM), which simply ended with JFCOM personnel largely transferring to the Joint Staff and tripling the size of that office in only a year.[13] These and related downsizing moves represent a fraction of the efficiencies possible in the Pentagon’s back-end support system, or the so-called “Fourth Estate.”
A more important reason to realign each of the defense workforces is that the current distribution of work among military personnel, defense civilians, and civilian contractors is not optimized. In 2013, the Congressional Budget Office (CBO) conducted a study to examine the cost-effectiveness of replacing military personnel performing noncombat support functions with Pentagon civilians.[14] The team found that a wartime insourcing initiative managed to replace 48,000 military personnel performing commercial functions with about 32,000 civilians—and maintain end strength all the while.[15] In the past year, both the CBO and Defense Business Board have highlighted and criticized the number of military personnel still conducting commercial functions at the Pentagon. The CBO estimated that 340,000 active duty military personnel worked in commercial positions in 2012,[16] while the landmark Defense Business Board study concluded that in 2015, 298,000 military personnel worked in the six “core business functions,” such as accounting, property management, and day-to-day noncombat logistics.[17]
The CBO study estimated that insourcing another 80,000 military positions to civilians would save $3.1 billion per year at a 1:1 replacement, or $5.7 billion at a 1:1.5 ratio.[18] Using federal defense civilians for certain jobs costs less over the long term, owing to the generous deferred and in-kind salary and benefits package of military personnel and reduced training requirements for civilians in certain occupational areas.[19]
A massive impediment to right-sizing the defense civilian workforce is the unwillingness of Congress to allow for a new round of base closures (BRAC), despite growing support from the communities likely to be affected by a new BRAC round (Figure 5).[20] In the 2016 National Defense Authorization Act (NDAA), House Armed Services Committee Chairman Mac Thornberry (R-TX) succeeded in his effort to open the door to a new BRAC round by requesting a full infrastructure study from the Department of Defense, delivered to Congress this month.[21] The Air Force and Army estimate that they currently carry 32 percent and 33 percent excess infrastructure, respectively.[22] Without a new base closure round, it will remain difficult to streamline the workforce at these facilities.
As Conrad Crane and John Bonin recently argued, the defense civilian workforce responds to the Pentagon’s real workload; arbitrary percentage cuts therefore only “mow the grass,” so to speak.[23] The true bureaucratic solution to the department’s sprawling, unconstrained staff is not the bureaucratic equivalent of a lawn mower or weed killer. In the absence of base closures, the Pentagon should solve this problem by pruning—empowering management to making intelligent, informed, and effective personnel choices.
The 2016 NDAA did take steps in the right direction on civilian workforce issues, although a generalized across-the-board headquarters reduction remains the flagship attempt currently underway. A similar one launched by Secretary of Defense Chuck Hagel received initial mixed reviews, and subsequent examination of personnel data casts doubt on how closely the implementation mirrored the original proposal.[24]
Additionally, Section 346 of the 2016 NDAA calls for a $10 billion reduction in headquarters, administrative, and support activity spending from 2015 to 2019.[25] The ancillary requirement of a 25 percent decrease in headquarters staff counts toward that target. Deputy Secretary of Defense Robert Work responded to this push by ordering a 25 percent constraint placed on appropriations from 2017 to 2020 for all major headquarters activities—including the Office of the Secretary of Defense, the Joint Staff, and defense agencies—to meet congressional intent.[26] In anticipation of the Pentagon’s rapid move to comply, Congress credited DoD with headquarters savings in the FY16 omnibus appropriations bill, although it also asked for a new DoD inspector general report to examine defense civilian salaries and deliver recommendations on how the department could better measure overall civilian compensation expenses.[27]
Yet topline appropriations decreases do not effectively shape any workforce. A department that yearly decries the foolishness of potential across-the-board sequestration cuts should not then turn around and apply across-the-board cuts to the defense civilian workforce.
Some progress was made in Section 1101 of the 2016 NDAA, which moves toward allowing Pentagon management to terminate employees based on performance, a long-standing demand by senior leaders.[28] Section 1105 extends the “probationary period” before civilians are hired to two years and allows military departments to extend probationary periods indefinitely. This change will allow managers more time to assess new hires in different positions and extend their authority to easily fire poorly performing employees for another year.[29] Section 1106 complements the extended probationary period by placing conditions on the automatic periodic pay increases that Pentagon civilians receive.[30]
Moving beyond such annual incremental fixes will require a serious effort to empower DoD management, which would look something like the Title 5 reform proposed in the August 2015 Force of the Future draft from Brad Carson’s personnel office.[31] These additions would augment the Voluntary Separation Incentive Pay and Reduction in Force authorities that the bipartisan 2014 National Defense Panel recommended for Pentagon management,[32] the latter of which Congress granted the department in the 2016 NDAA.[33]
Additionally, Congress should consider implementing successful personnel management and retention policies, such as standardized exit surveys and the Navy’s busywork-killing Reducing Administrative Distractions program.[34] Rather than focusing on fancy new weapons technologies in its outreach to Silicon Valley, the Pentagon would do well to study the Valley’s back-end support to address the Pentagon’s outdated business practices, such as bespoke accounting and management systems.[35]
Talented people are not dissuaded from working for the Pentagon because they lack the patriotism of earlier generations. They are dissuaded because the Pentagon’s personnel system is stuck in 1955, despite the fact that the Military Compensation and Retirement Modernization Commission (MCRMC) noted a “fundamental mismatch” between the current Pentagon workforce and the department’s personnel management structure.
A warning: such reform will face backlash from several quarters, most notably the American Federation of Government Employees union.[36] Given the opposition of each interest group to specific changes, moving toward a properly balanced Pentagon civilian workforce must be a holistic effort considering all defense workforces in tandem and their corresponding workloads.[37] Even given the additional authorities described earlier, management will find its hands largely tied absent a new base closure round. To harmonize defense civilian workforce realignment with similar efforts in the civilian service contractor workforce, the deputy chief management officer position should act as a backstop to prevent the bureaucratic trickery wherein positions deleted in one group show up in another—rendering personnel changes akin to squeezing a balloon.
Pentagon Services Contractors: Lots of Spending, But Little Oversight
The Pentagon’s difficulty in achieving acquisition reform of weapons purchases is as old as time immemorial, but it has recently been brought into focus because of a budget drawdown that resulted in significantly decreased weapons procurement and an accelerating loss of US military technological advantage. Constant outrage about weapons cost growth has led to sustained attention on acquisition reform for decades, with three attempts during the Obama administration’s tenure alone: Congress’ 2009 Weapons System Acquisition Reform Act (commonly referred to as the “Levin-McCain bill”), the Pentagon’s internal three-part Better Buying Power improvements, and a joint acquisition system retooling push by Armed Services Committee Chairmen John McCain (R-AZ) and Mac Thornberry in the 114th Congress.
But all of this extensive acquisition reform was nearly exclusively focused on weapons, not services, even though the Pentagon buys more of the latter than the former. Hiding amid all these efforts is a $150 billion budgetary equivalent of a black hole: purchasing of services by the Pentagon. As noted earlier, these services contractors are private-sector civilians who provide back-end support for the Pentagon in addition to the federal defense civilian workforce. The spending on the provision of labor, or services, is not ignored in the conversation on modernizing the Pentagon’s business processes because it is politically convenient to do so; rather, no one knows where to begin. In most areas of Pentagon inefficiency, researchers have determined the problem, devised solutions, and spent years trying to implement those solutions.
In services contracting, however, there is not yet even a determination of the problems beyond a realization that these expenditures have grown worryingly large and remain lacking in adequate insight or accountability. Without an ability to marshal facts and figures to support a case for right-sizing the services contractor workforce, Congress and outside experts are left trying to nail Jell-O to the wall. As I wrote in a Wall Street Journal editorial in July 2015, “Because the Pentagon cannot adequately manage this unaccountable army of contractors, it ends up shortchanging the military.”[38]
The main problem is that the budgeting for the purchasing of services is very poorly treated in terms of tracking and data. In 2014, then-Assistant Secretary of the Air Force for Acquisition William LaPlante stated:
I jokingly say knowledge-based services should just be called “stuff” . . . because the way we categorize it, it can contain everything from a plasma physicist helping on the re-entry of a Minuteman missile, to designing a building, to helping with a view graph presentation. It’s all real work, but we’ve got to get more precise on how we classify these things.[39]
A stroll through the existing dataset of contracts for services shows everything from fuel and facility maintenance to basic IT support, financial administration, and logistics. As the January 2015 report by the Defense Business Board revealed, an overwhelming concentration of contractors work on the Pentagon’s core business processes: human resources, health care, financial flow, supply chain and logistics, acquisition, and property management. In recommending a fundamental rethink of the department’s day-to-day operations, the Defense Business Board determined that the services contractor workforce presented the largest savings (about $36 billion) in spending and personnel over five years, nearly double even the projected savings from the Pentagon’s federal civilian workforce.[40]
Essentially, anything the Pentagon buys that is not a weapons system or piece of equipment falls under the category of “services,” which has overtaken the purchasing of vehicles, aircraft, ships, and other hardware over the past five years.[41] From 2012 to 2014, services acquisition rose from 51 percent to 55 percent of the total acquisition budget as weapons procurement commensurately dropped. Only in 2015 did services contracting fall back modestly to 53 percent. As deputy Pentagon acquisition chief Alan Estevez said last year:
We spend more on services than we spend buying what people think of as direct combat capability. . . . I’m spending that $155 billion dollars without the same level of oversight and scrutiny that is performed when I am buying things.[42]
Worse yet, identifying the trends in employment within this type of spending is impossible—even though, by definition, it is labor (read: people) intensive. Wildly varying assumptions about the cost of an average full-time equivalent (FTE) services contractor could leave the workforce at anywhere from 653,000 (assuming each FTE costs $220,000) to 736,000 (assuming each FTE costs $192,000) in 2015. While spending on services has declined from 2014 to 2015 along with the total defense budget, it remains highly doubtful that the workforce has shrunk commensurately with the military’s drawdown. Cue Chairman McCain’s response in an early April 2016 hearing: “We look forward to the day you can tell us how many contractors are employed by this department [DoD]. That will be one of the most wonderful days of my career.”[43]
The reason why little oversight or scrutiny of services contractors exists demands some backstory. In 2008, near the height of supplemental wartime spending, Congress finally began to impose needed oversight on the Pentagon’s services spending portfolio. Congress required the Pentagon to forward an annual inventory of contracted services (ICS) that also contained an estimate of contractors employed by the department, and the Pentagon has attempted to do so since 2009.[44]
Congress has all this data, yet has done little to rein in services contracting spending. That is because the data provided to Congress by the Pentagon are so poorly captured and classified, so ethereal in their standards, that deriving insights and conclusions from the dataset is nigh impossible.
An analysis of the existing ICS datasets reveals that comparisons cannot be made on a year-over-year basis because the Pentagon changed its accounting and classification standards so frequently. Often, defense leaders do this to obscure or gloss over bad news. It is a well-known method in policy and strategy documents for the Pentagon to change its classification and counting systems. For example, in the last four Quadrennial Defense Reviews (2001, 2006, 2010, and 2014), the Air Force switches between counting squadrons, wings, and wing-equivalents of different sizes. Despite the constant reclassification, the decline in actual fighter aircraft has been well-documented by independent investigations.[45] Congress should consider mandating standardized data at this point to stop the blatant obfuscation of oversight.
The congressional watchdog Government Accountability Office has issued no less than 13 reports addressing services acquisition, including eight reports that specifically addressed shortfalls in data collection and the Common Contractor Manpower Data System.[46] Additionally, the current contracting dataset’s inability to extend into the past means that the Pentagon cannot understand what happened in the civilian services contractor workforce during the 1990s drawdown—whereas the federal defense civilian workforce was well-documented during that era.
As envisioned by Congress, the inventory of contracted services should serve as a complementary dataset to help lawmakers and staff understand trends and shortcomings in the Pentagon’s services enterprise and legislate accordingly. Without better situational awareness of the services acquisition sector, Congress remains unable to consider appropriate bold steps to assist the Pentagon in wrangling with the problem or even to conduct robust oversight of this $150 billion pot of money. Amid the general congressional silence on this topic, even engaged offices are reduced to asking for better data, such as the acerbic note by Senator Claire McCaskill (D-MO) that said “there are four independent CMRA [FTE tracking] systems being used by 32 components, which in 2012 left $58 billion of $187 billion in service contract obligations unreported.”[47]
The fundamental shortcoming of the Pentagon’s services contractor dataset is that it does not actually link real numbers of personnel to real work completed, despite its listing of every services contract signed. Additionally, this inventory list does not include classified contracts or accurately track contracts for inherently governmental functions or activities closely associated with inherently governmental functions.[48]
In response to growing criticism from Congress and outside experts of services contracting run amok, acquisition chief Frank Kendall launched a moderate and overdue attempt to wrangle with services spending in January. This new plan engages in the classic government response to problems—more bureaucracy—by creating new positions to oversee certain services acquisition sectors, to be appointed by Kendall. It is not the right solution. While the new functional domain experts will provide much-needed expertise, their role in developing metrics for functional services contracting areas could complicate plans to standardize data across the department. Similarly, the new Services Requirement Review Board simply adds reporting requirements.[49] And yet the fundamental data problem remains unaddressed by this “solution.” Congress will have to take the lead in more stringent accountability and eventual reform of the 700,000-large workforce of services contractors employed by the Pentagon and their workload.
On the other hand, the plan takes the sensible step of devolving authority for services contracts worth more than $1 billion to the relevant service acquisition chiefs, which could improve accountability for large contracts. In time, the demonstrated interest of Chairman Mac Thornberry in applying a Nunn-McCurdy cost breach notification regime to large services contracts may add pressure to set goals and adequately monitor billions of dollars of spending,[50] such as the recently opened $17.5 billion contract to provide global IT services for the military.[51]
To augment Kendall’s attempts, the secretary of defense should designate the deputy chief management officer to oversee baselining and standardizing of the services contracting data with a set deadline and prevent reclassification in successive years to allow a common picture to emerge. If necessary, Congress could re-legislate this requirement, although it may have to waive data reporting requirements for a year to allow the Pentagon to fully take stock of the dataset’s shortcomings. Such a requirement could also demand time limits on establishing an office to conduct implementation of common contract manpower data systems, given that the plans to do so were approved almost two years ago.[52]
Congress could also demand a more useful strategic biennial workforce plan that explicitly addresses services acquisition.[53] A 2012 Defense Acquisition Journal article makes the case that the services contractor workforce is large enough and skilled enough to meet current requirements. Instead it recommends that the services acquisition leadership focus on filling existing billets and providing appropriate, relevant training to acquisition personnel that addresses the most commonly used contract vehicles and immerses staff in the unique characteristics of regional acquisition environments.[54]
As the Pentagon pursues outreach to Amazon and others on cloud-based email management,[55] it might also profit from exploring a partnership in inventory management. Secretary Carter’s recently created Defense Digital Service could help bridge the divide between the Pentagon’s outdated core business processes and the rapidly innovating commercial sector.[56]
Much like DC’s Metro system, large, long-term fixes will be difficult without shutting down part of the reporting system to sit down with those responsible for the purchases of services and consider the problem anew. Indeed, the Defense Business Board report recommends fully benchmarking, optimizing, and renegotiating current services contracts, even as new standards are applied to new contracts moving forward.
The report calls for nothing less than a “revolutionary” change in how the Pentagon conducts its core business processes to move from a centralized Soviet-esque system to a modern organizational structure that properly incentivizes productivity, efficiency, and innovation instead of regulatory compliance and bureaucratic inertia. Implemented fully, the board estimated these changes could save $125 billion over five years, largely through incentivizing the military branches themselves to reduce unnecessary services spending in exchange for greater readiness and procurement funding.[57]
Pentagon leadership looking for inspiration on how to implement these changes should turn to the weapons acquisition fixes passed in the 2015 defense policy bill, which largely focus on decentralizing management authority and accountability to unleash the talents of the defense contracting workforce and increase the input of local leadership.
Because the shadow workforce of civilian contractors performs many of the same tasks as federal defense civilians, any attempt to shape either workforce will wither on the vine if not performed in concert with an attempt to shape the other. As with defense civilians, significant political constituencies both within and without the Pentagon will resist change. As such, a fundamental transformation of the Defense Department’s services contractors workforce necessitates the personal interest of the next secretary of defense and a stated willingness to work with nontraditional partners in the business community.
Modernizing Military Health Care: Better Service and Value
As Pentagon and Hill leaders seek to bring the Defense Department’s human resources management systems into the 21st century through efforts such as military retirement reform and select Force of the Future initiatives, more must be done to make all major military benefits portable for the 80 percent of the US military who do not serve a full career. This benefit portability should include health care.
The rationale for updating the military’s pension and making it more like a 401(k) was precisely to give the vast majority of those who enlist for only one or two tours access to a new benefit that they deserved, but did not receive before. Those same service members should exit the military with the ability to have a “rucksack” of benefits to take along, including a flexible variation of access to Tricare, the military health care system.
This is a correct and overdue push to meet the demands of a changing recruiting pool in which most service members are or will be married, youth are increasingly mobile and diverse, and quality in the ranks remains high, meaning competition for talent with the private sector will remain fierce. As noted by the Military Compensation and Retirement Modernization Commission (MCRMC), current service members are more educated and skilled, a higher percentage are female or have children, and usage of the reserve components has risen drastically since the inception of the current human resources system used by the Pentagon.[58]
Focusing on the quality of the benefit provided and educating its recipients about this are important, as the cost of military health care is growing alongside the beneficiary pool, yet contributions are not keeping pace. Tricare for Life imposes almost no costs on its beneficiaries, and working-age retirees enrolled in Tricare Prime enjoyed almost two decades since the establishment of Tricare without significant increases in cost sharing from 1996 to 2012. The share of health care costs paid by working-age retirees dropped from an average of 27 percent in 1996 to only 11 percent by 2012,[59] but the first cost sharing increase—an enrollment fee for those retirees using Tricare Prime—did not occur until 2012.[60] All this despite the fact that, per the Congressional Budget Office, “between 2000 and 2012, funding for military health care increased by 130 percent.”[61] Absent change, the percentage of the defense budget devoted to health care will continue to grow while the shortcomings of today’s military health care system remain.
Policymakers face two challenges as they begin to consider changes to the military health care: (1) cost-effectively expanding the number of beneficiaries and their access to and quality of care; and (2) ensuring cutting-edge military medical readiness in war and peacetime. These two objectives are sometimes complementary; at other times, they clash. For instance, the readiness mission requires a heavy caseload of trauma surgery and anesthesiology, while pediatrics and obstetrics are a primary demand by families in the provision of care to Tricare beneficiaries.[62] Balancing the two missions is critical for any attempt to make the military’s health care system more effective.
The Military Health System (MHS) and Defense Health Agency are tasked with providing access to care for military service members and their dependents and ensuring the readiness of medical military personnel. In 2015 (the latest data available), approximately 9.5 million people were eligible for some form of Tricare, with 56 percent of those being military retirees and their family members.[63]
The MHS has three major sections. Tricare Prime, the most subsidized portion of the MHS, serves active duty personnel, their families, and enrolled working-age military retirees and their families.[64] Tricare Prime is relatively cheap, but allows the health recipient limited choices about where and from whom to get care. A significant portion of Prime expenditures occur at Military Treatment Facilities (MTFs), which are run by the military itself.
Tricare Standard and Tricare Extra serve current service members and their families in additional to Medicare-eligible service members and their families. These programs are more expensive, but they give recipients a larger amount of flexibility in choosing providers. Lastly, as of 2002, Medicare-eligible military retirees can have their medical costs fully defrayed through the Tricare for Life program.
In considering the provision of care to Tricare beneficiaries writ large, erstwhile discussions about “military health care reform” have focused largely on defining a balance between the cost of care and the degree of subsidy that military service members and their families “deserve.” These arguments are largely subjective. As University of Michigan Professor Mark Fendrick recently phrased it in testimony to the Senate Armed Services personnel subcommittee: “People frequently ask me whether the amount of cost sharing faced by Tricare members it too high, too low, or just right. The answer, of course, is ‘it depends.’”[65]
The military health care system’s structural problems in some ways mirror those of private-sector health care; the 2014 National Defense Panel went so far as to explicitly link the two.[66] Yet certain health care challenges are also unique to the military—what civilian analogue exists for the mental health needs of a drone operator who pulls the trigger every day before returning home to his family for dinner?[67]
Over the past two years, Congress, the Department of Defense, and outside groups have wrangled over potential responses to the shortcomings of the military health care system identified above. The opening shot in this discussion occurred when the congressionally mandated MCRMC released its report in January 2015, as required by Congress. The largest MCRMC recommendations were replacing Tricare with a system similar to the health care plan of federal civilians (a nonstarter in Congress), increasing cost sharing for beneficiaries, and creating new commands to avoid allowing recent advances made by military medics to atrophy over time.[68] Although Congress intends to address military health care in the 2017 defense policy bill, the 2016 NDAA also contained initial changes to the health care system, including authorities to experiment with “value-based care,” which focuses on the subjective value of care to beneficiaries instead of merely tallying up the cost of medical procedures.
The bill also contained a push to increase burden sharing by increasing pharmaceutical copays and incentivizing beneficiaries to use lower-cost mail-order drugs. Why is this important? As I wrote last year:
While brand-name drugs cost four times more than generics at military treatment facilities ($46 vs. $13), they cost 10 times more at retail pharmacies. This is asking the taxpayer to spend $226 versus $22 for the same product simply offered to the recipient differently. About 51 percent of drug costs overall are incurred at retail pharmacies. With 72 percent of recipients using generic drugs currently, the Defense Department lags behind the private sector’s 81 percent generic utilization rate.[69]
Such efforts focusing on the health care system’s incentive architecture could profitably be used in dozens of other areas. For instance, the 2016 NDAA also created a three-year pilot program to allow Tricare beneficiaries to use urgent-care facilities without authorization, because the inability to do so may be driving over usage of expensive emergency-room visits.[70] What once looked like an intelligent, centralized decision—placing a barrier between beneficiaries and expensive urgent-care usage—may have actually driven more inefficient behavior.
In other endeavors, the answer may actually be more centralized leadership, such as in streamlining the messy health care budget (as recommended by the MCRMC), mandating medical-specific training for relevant contracting officials, triaging the problem of misaligned usage rates at MTFs,[71] and giving political cover to the military medical community as it tries to maintain its readiness.[72]
The last point—military medical readiness—is critically important. The defense health care establishment must not only provide cost-effective treatment for its recipients, but also train to maintain the readiness of military medical personnel for combat operations.
Trying to balance both missions has proved exceedingly difficult, particularly as the Pentagon’s medical professionals try to figure out how to maintain significant advances in combat care bought at dear cost during the Iraq and Afghanistan wars. As the active duty force has shrunk through the postwar drawdowns and sequestration, retirees increasingly outnumber the combined population of active and reserve personnel in the Pentagon’s health care system. This means that military medical personnel see fewer cases and patients relevant to maintaining their combat care proficiency. Some niche capabilities necessary to keep combat medics and trauma surgeons sharp will surely sail against the budgetary wind in peacetime: Fort Sam Houston’s prosthetics rehab Center for the Intrepid will simply not receive nearly the number of cases it did during the height of Operations Iraqi Freedom and Enduring Freedom.
To better manage its medical readiness, the MCRMC recommended that the Pentagon create a new 4-star Joint Readiness Command with a subordinate medical command and designate a new medical readiness position on the Joint Staff, but the medical community has signaled clearly that it does not want nor need a new bureaucratic layer to manage its readiness.[73] HASC Military Personnel Subcommittee Chairman Rep. Joe Heck (R-NV), a former military doctor, is carefully weighing possible organizational changes alongside more immediate fixes to address military medical readiness in this year’s defense policy bill.[74] No matter what happens in Congress, maintaining certain inefficient yet critical medical capabilities that underpin medical readiness will require, at a minimum, sustained attention by successive secretaries of defense.
Looking toward the next administration and the 115th Congress, changes to military health care would be well-served by considering a conceptual alliance with the Force of the Future personnel system revamp led by Secretary Carter and former Under Secretary Brad Carson. Certainly, increasing the flexibility of the military medical personnel system to allow for training sabbaticals and midcareer entrance by qualified civilian medical personnel could appreciably bolster both the Tricare system and the military medical community. Also, moving from a hidebound, pay-for-procedure health care structure to a value-based, continuum-of-service model would empower beneficiaries to manage care choices, as their private-sector equivalents can.
Finally, greater awareness of the value and quality of this benefit for the beneficiaries is overdue. Tricare recipients pay only 5 percent of every dollar spent on the Tricare system, in contrast to an average private-sector rate of 28 percent.[75] Yet the department’s own survey of beneficiaries showed a 5 to 6 percent gap between civilian benchmarks and Tricare performance,[76] and while the MCRMC’s health care survey highlighted an overall dissatisfaction, incredibly high importance was attached to improving access to and continuity in care.[77] Still, another survey by the Military Officers Association of America indicated that about 75 percent of beneficiaries believed it unreasonable to pay more for current health care options.[78]
It is not a question of whether service members and their families deserve all the benefits they receive, despite reform opponents’ best efforts to tar advocates of reduced health care expenditures as heartless auditors. Nor is it a question of whether the Pentagon spends “too much” on health care. Rather, the future of military health care must focus on a broader question: are beneficiaries and military medical personnel receiving adequate value and quality for the amount of funding obligated to the military health care system?
Reform to Rebuild
While reform is no substitute for adequate, stable defense funding, the political reality is that there is no new money for defense absent continuous “reform” and good governance at and by the Pentagon. Those who seek budgetary redemption in efficiencies and back-end savings will be disappointed.
Looking forward, defense reform must focus as much on improving effectiveness as it does on driving costs down. While the “waste, fraud, and abuse” at the Pentagon is a mere rounding error in the context of overall defense spending, continuously rooting it out serves as a crucial trust-building mechanism for those who wish to rebuild America’s military.
More importantly, structural inefficiencies at the Pentagon detract from generating and sustaining needed combat power. Alarm bells may be ringing about rising costs, but the Pentagon’s arthritic support system also endangers America’s military supremacy.[79] The archaic management structure—both in the uniformed military and the Pentagon more broadly—renders America’s armed forces unable to strategically approach new threats and challenges.
A new Congress and leadership team at the Pentagon in 2017 should focus on these three areas of overdue and underappreciated reform when building a blueprint for governing in the next administration. Each is a complicated effort that will not be solved in just one year. But the benefits of sustained attention and care by policymakers can yield a happier workforce performing a critical mission for the nation along with the potential for some new investment in modernization and innovation.
About the Author
Mackenzie Eaglen is a resident fellow in the Marilyn Ware Center for Security Studies at the American Enterprise Institute, where she works on defense strategy, defense budgets, and military readiness.
Notes
Office of the Secretary of Defense, Track Four Efficiency Initiatives Decisions, March 14, 2011, http://www.acq.osd.mil/dpap/pdi/pc/docs/3-14-2011_Track_Four_Efficiency_Initiatives_Decisions.pdf.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, United States Institute of Peace, July 31, 2014, http://www.usip.org/sites/default/files/Ensuring-a-Strong-U.S.-Defense-for-the-Future-NDP-Review-of-the-QDR_0.pdf.
Jeb Bush, “America Must Lead Against New Generation of Threats,” Military.com, December 29, 2015, http://www.military.com/daily-news/2015/12/29/bushs-view-america-must-lead-against-new-generation-of-threats.html.
Nick Gillespie, “Donald Trump Denounces Wasteful Pentagon Spending, Vows Great Defense with No Additional Spending,” Reason.com, February 8, 2016, https://reason.com/blog/2016/02/08/donald-trump-denounces-wasteful-pentagon; Travis J. Tritten, “Fiorina Steps Ahead of GOP Pack with Specific Military Goals,” Stars and Stripes, September 17, 2015, http://www.stripes.com/fiorina-steps-ahead-of-gop-pack-with-specific-military-goals-1.368656; Alexandra Jaffe, “Kasich: Boost Defense Spending with Reforms, Lose Sequestration,” NBC News, August 31, 2015, http://www.nbcnews.com/politics/2016-election/kasich-boost-defense-spending-reforms-lose-sequestration-n419111; David Graham, “There’s a Reason Ted Cruz Won’t Say How Much His Pentagon Plans Will Cost,” Defense One, February 16, 2016, http://www.defenseone.com/politics/2016/02/theres-reason-ted-cruz-wont-say-how-much-his-pentagon-plans-will-cost/125980/; and “Restoring and Modernizing American Strength,” Marcorubio.com, November 2015.
Mackenzie Eaglen and Michael O’Hanlon, “Military Entitlements Are Killing Readiness,” Wall Street Journal, July 25, 2015, http://www.wsj.com/articles/SB10001424127887324110404578626431535359060.
Jared Serbu, “Inside the DoD Reporter’s Notebook: DoD Drills Down on Service Contracting; A Controversial Decision on Contractor Pay,” Federal News Radio, June 2, 2014, http://federalnewsradio.com/defense/2014/06/inside-the-dod-reporters-notebook-dod-drills-down-on-service-contracting-a-controversial-decision-on-contractor-pay/.
Mackenzie Eaglen, “Cutting Troops But Letting the Civilian Army Swell,” Wall Street Journal, July 23, 2015, http://www.wsj.com/articles/cutting-troops-but-letting-the-civilian-army-swell-1437692640.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, 4.
Aaron Mehta and Joe Gould, “Pentagon Institutes Civilian Hiring Freeze,” Defense News, March 25, 2016, http://www.defensenews.com/story/defense/policy-budget/budget/2016/03/24/pentagon-civilian-hiring-freeze-dod-position-staff-cuts/82221662/.
Mackenzie Eaglen, “Shrinking Bureaucracy, Overhead, and Infrastructure: Why This Defense Drawdown Must Be Different for the Pentagon,” American Enterprise Institute, March 20, 2013, https://www.aei.org/publication/shrinking-bureaucracy-overhead-and-infrastructure-why-this-defense-drawdown-must-be-different-for-the-pentagon-2/.
Office of the Deputy Secretary of Defense, “Carter Memo on Headquarters Reduction,” USNI News, July 31, 2013, https://news.usni.org/2013/08/02/document-carter-memo-on-headquarters-reduction.
President’s Budget Request, Fiscal Years 2010–2017, Green Book Table 7-6, Office of the Under Secretary for Defense (Comptroller).
Eaglen, “Shrinking Bureaucracy, Overhead, and Infrastructure.”
Congressional Budget Office, Replacing Military Personnel in Support Positions with Civilian Employees, December 2015, https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51012-Military_Civilian_Mix_OneCol.pdf.
Ibid, 2.
Ibid, 1.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change, January 22, 2015, 10, 19, http://dbb.defense.gov/Portals/35/Documents/Meetings/2015/2015-01/CBP%20Task%20Group%20Out-brief%20Slides_FINAL.pdf.
Congressional Budget Office, Replacing Military Personnel.
Ibid, 2, 8.
Jared Serbu, “Military Communities on BRAC: Let’s Get On with It,” Federal News Radio, July 6, 2015, http://federalnewsradio.com/defense/2015/07/military-communities-brac-lets-get/.
National Defense Authorization Act for Fiscal Year 2016, HR 1735, 114th Cong., (May 5, 2015): Section 2815, 1128, https://www.congress.gov/bill/114th-congress/house-bill/1735.
Department of Defense Infrastructure Capacity, March 2016 (contained in letter from Deputy Secretary of Defense Robert Work to Chairman Mac Thornberry, April 12).
Conrad Crane and John Bonin, “The Next Task Force Smith: The Danger of Arbitrary Headquarters Reductions,” War on the Rocks, October 27, 2015, http://warontherocks.com/2015/10/the-next-task-force-smith-the-danger-of-arbitrary-headquarters-reductions/.
Stephen Daggett, “Preliminary Assessment of Efficiency Initiatives Announced by Secretary of Defense Gates on August 9, 2010,” Congressional Research Service, August 12, 2010, https://www.fas.org/sgp/crs/natsec/efficiency.pdf.
National Defense Authorization Act for Fiscal Year 2016, Section 346, 157.
Charles S. Clark, “Pentagon Orders Even More HQ Cuts, Infuriating Employees’ Union,” Defense One, September 9, 2015, http://www.defenseone.com/management/2015/09/pentagon-orders-even-more-hq-cuts-infuriating-employees-union/.
Fiscal Year 2016 Consolidated Appropriations Act, HR 2029, 114th Cong., (December 18, 2015): Division C, https://www.congress.gov/bill/114th-congress/house-bill/2029/text.
National Defense Authorization Act for Fiscal Year 2016, Section 1101, 745.
Ibid., Section 1105, 748.
Ibid., Section 1106, 751.
Brad Carson, “Civilian Personnel Reform Proposals,” September 2015, https://www.govexec.com/media/gbc/docs/pdfs_edit/091515cc1.pdf.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future.
National Defense Authorization Act for Fiscal Year 2016, Section 1101, 745.
Tim Kane, “Ash Carter’s Speech: A Beginning, Not a Defeat, of the Personnel Revolution,” Foreign Policy, November 23, 2015, http://foreignpolicy.com/2015/11/23/ash-carters-speech-a-beginning-not-a-defeat-of-the-personnel-revolution/; and Meghann Myers, “Navy Re-Launches Forum for Best Sailor Ideas,” Navy Times, June 15, 2015, http://www.navytimes.com/story/military/2015/06/13/navy-reducing-administrative-distractions-campaign-new-issues-2015/71021746/.
James Hasik, “PowerPoint Guys Versus Bean Counters,” Atlantic Council Defense Industrialist, September 21, 2015, http://www.atlanticcouncil.org/blogs/defense-industrialist/powerpoint-guys-versus-bean-counters.
Charles S. Clark, “Pentagon Plan to Move Civilian Workers Outside the Civil Service System Draws Fire,” Government Executive, September 15, 2015, http://www.govexec.com/management/2015/09/pentagon-plan-move-civilian-workers-outside-civil-service-system-draws-fire/121043/.
Joe Davidson, “Defense Bill Hits Pay and Job Security of Pentagon Employees, Could Set Wider Precedent for Federal Workers,” Washington Post, July 21, 2015, https://www.washingtonpost.com/news/federal-eye/wp/2015/07/21/defense-bill-hits-pay-and-job-security-of-pentagon-employees-could-set-wider-precedent-for-federal-workers/; and Clark, “Pentagon Orders Even More HQ Cuts.”
Eaglen, “Cutting Troops But Letting the Civilian Army Swell.”
Jared Serbu, “Inside the DoD Reporter’s Notebook: DoD Drills Down on Service Contracting; A Controversial Decision on Contractor Pay,” Federal News Radio, June 2, 2014, http://federalnewsradio.com/defense/2014/06/inside-the-dod-reporters-notebook-dod-drills-down-on-service-contracting-a-controversial-decision-on-contractor-pay/.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change.
Government Accountability Office, “DoD Service Acquisition: Improved Use of Available Data Needed to Better Manage and Forecast Service Contract Requirements,” February 18, 2016, http://www.gao.gov/products/GAO-16-119?utm_medium=email&utm_source=govdelivery.
Sydney Freedberg Jr., “Kendall to Overhaul ‘Chaos’ Of Pentagon’s $155 Billion Services Market,” Breaking Defense, June 9, 2015, http://breakingdefense.com/2015/06/kendall-to-overhaul-chaos-of-pentagons-155-billion-services-mess/.
John McCain, remarks at Senate Armed Services Committee hearing on the Posture of the Army, April 7, 2016.
Office of Defense Procurement and Acquisition Policy, “Acquisition of Services Policy,” http://www.acq.osd.mil/dpap/cpic/cp/acquisition_of_services_policy.html.
Mackenzie Eaglen, “Pentagon’s Aviation Plan Headed for a Dead Stick Landing,” American Enterprise Institute, May 31, 2015; Mackenzie Eaglen, “Is America’s Air Force Dying?,” National Interest, May 7, 2014; and “2015 USAF Almanac,” Air Force Magazine, May 2015, 45.
Office of Defense Procurement and Acquisition Policy, “Reports,” http://www.acq.osd.mil/dpap/sa/Learn-More/Reports.html.
Claire McCaskill to Chuck Hagel, July 21, 2014, http://1yxsm73j7aop3quc9y5ifaw3.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/2014-07-21-McCaskill-Letter-to-DOD-re-Contractor-Inventory.pdf.
Government Accountability Office, “DOD Inventory of Contracted Services: Actions Needed to Ensure Inventory Are Complete and Accurate, November 2015.
Scott Maucione, “DoD’s Long-Awaited Policy Streamlines Services Contracting,” Federal News Radio, January 5, 2016, http://federalnewsradio.com/acquisition/2016/01/dod-unveils-long-awaited-service-contract-policy/.
Colin Clark, “HASC Mulls Nunn-McCurdys for Operations & Support Costs,” Breaking Defense, February 3, 2016, http://breakingdefense.com/2016/02/hasc-mulls-nunn-mccurdys-for-operations-support-costs/.
Frank Konkel, “Pentagon Now Taking Bids on $17.5B Encore III Contract for Global IT Services,” Netgov, March 3, 2016, http://www.nextgov.com/defense/2016/03/pentagon-now-taking-bids-175b-encore-iii-contract-global-it-services/126387/.
Government Accountability Office, “Defense Acquisition: Update on DoD’s Efforts to Implement a Common Contractor Manpower Data System,” May 19, 2014, 3.
Biennial Strategic Workforce Plan, 10 U.S.C. § 115b.
Rene Rendon, Uday M. Apte, and Aruna Apte, “Services Acquisition in the DoD: A Comparison of Management Practice in the Army, Navy, and Air Force,” Acquisition Research Journal 19 no. 1 (2012): 24.
Frank Konkel, “The Pentagon’s Next Unclassified Email System May Live in the Cloud,” Defense One, September 22, 2015, http://www.defenseone.com/news/2015/09/pentagons-next-unclassified-email-system-may-live-cloud/121682/.
Patrick Tucker, “Meet the Head of the Pentagon’s Agile New Digital Team,” Defense One, November 18, 2015, http://www.defenseone.com/technology/2015/11/meet-head-pentagons-agile-new-digital-service/123825/.
Defense Business Board, Transforming DoD’s Core Business Processes for Revolutionary Change.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, January 2015, 14, http://www.mcrmc.gov/public/docs/report/mcrmc-finalreport-29jan15-hi.pdf.
President’s Budget Request, Fiscal Year 2013, Budget Overview, Office of the Under Secretary for Defense (Comptroller), 5-3.
Don Jansen, “Military Medical Care: Questions and Answers.” Congressional Reserve Service, 8.
Congressional Budget Office, “Approaches to Reducing Federal Spending on Military Health Care,” January 2014, 4.
John Whitley, testimony to the Senate Armed Services Subcommittee on Personnel, February 23, 2016, 18.
Defense Health Agency, “Evaluation of the TRICARE Program Fiscal Year 2015 Report to Congress,” February 28, 2015, 14, http://www.health.mil/Military-Health-Topics/Access-Cost-Quality-and-Safety/Health-Care-Program-Evaluation/Annual-Evaluation-of-the-TRICARE-Program.
Ibid.
A. Mark Fendrick, “The Essential Role of Clinical Nuance and Member Responsibility in TRICARE Benefit Redesign,” testimony to the Senate Armed Services Subcommittee on Personnel, February 23, 2016.
National Defense Panel, Ensuring a Strong U.S. Defense for the Future, 4.
Matthew Power, “Confessions of a Drone Warrior,” GQ, October 22, 2013, http://www.gq.com/story/drone-uav-pilot-assassination.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, January 2015, 60, http://www.mcrmc.gov/public/docs/report/mcrmc-finalreport-29jan15-hi.pdf.
Jim Talent and Mackenzie Eaglen, “Defense Bill at an Impasse, But a Solution Is Within Reach,” The Hill, July 29, 2015.
National Defense Authorization Act for Fiscal Year 2016, section 725.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission: Final Report, 66.
Ibid., 69.
Jonathan Woodson, testimony to the House Armed Services Subcommittee on Personnel, June 11, 2015, 5.
Patricia Kime, “House Panel Weighs Allowing Civilian Trauma Cases at More Military Hospitals,” Military Times, February 26, 2016.
Lindsey Graham, “The Healthcare Recommendations of the Military Compensation and Retirement Modernization Commission,” testimony before the Senate Armed Services Subcommittee on Personnel, February 25, 2015, 9.
Defense Health Agency, “Evaluation of the TRICARE Program Fiscal Year 2015 Report to Congress,” 39.
Military Compensation and Retirement Modernization Commission, Report of the Military Compensation and Retirement Modernization Commission, 88.
Military Officers Association of America, “MOAA’s Tricare Reform Survey Results,” December 4, 2015.
Mackenzie Eaglen et al., “Open Letter: A Defense Reform Consensus,” Politico, April 28, 2015.
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