Be Realistic, But Keep Trying
These barriers suggest that DoD should be realistic in assessing the prospects for future efficiency savings. The idea that multiple tens of billions of dollars a year can be saved through efficiencies over the next few years—and used to pay for new programs—is almost certainly unrealistic. Because of DoD’s mission focus, managers tend to translate efficiencies into improvements in performance rather than savings, making it even less likely that large sums will be freed up to pay for new initiatives. Because it is hard to achieve efficiencies, another lesson is clear: DoD should avoid using efficiency savings to fill budget shortfalls until the savings are actually realized.
While formidable, barriers to efficiencies should not be an excuse to stop seeking them. In an organization as vast in size as the Department of Defense, even modest percentage reductions in costs can result in large savings for the taxpayer. Moreover, while it is hard to identify past initiatives that have saved tens of billions a year, history suggests that efficiency savings could total multiple billions of dollars a year—surely a goal worth pursuing.
What initiatives should the department pursue? Based on the judgment of defense secretaries over three decades and recent studies, several categories stand out as worthy of continued or expanded effort.
- Base Closures: DoD estimates that another round of base closures could ultimately yield savings of some $3.5 billion a year. Closing unneeded bases probably constitutes the single largest source of potential efficiency savings. Congress recently granted the needed authority, but not until 2005.
- Competitive Sourcing: The President’s Management Agenda calls for competing 5 percent of eligible jobs by 2002 and more beyond, efforts that could save a billion dollars a year or more.
- Acquisition Reform: Recent efforts to improve the way DoD develops and produces new weapon systems have yielded savings, and further dividends should be possible.
- Best Business Practices: Continued efforts to implement electronic commerce, paperless contracting and automation should yield additional savings. In addition, exploiting web-based learning might reduce training costs. Also promising are public-private partnerships – that is, initiatives that enlist private expertise to solve problems not currently being adequately addressed by the public sector.