Defense Secretary Dr. Mark T. Esper's Defense-Wide Review is paying off, with $5.7 billion freed up for more important priorities, senior defense officials said.
The officials — who spoke with reporters Feb. 5 — are looking to institutionalize the process to subject the defense agencies that make up "the Fourth Estate" — parts of the Defense Department that are not military services — to the same pressures the services face when crafting their budgets.
This is even more critical in fiscal year 2021, as the defense budget will remain flat, which means that after accounting for inflation, the DoD budget will buy less.
The money saved will flow to National Defense Strategy priorities — including research into hypersonic weapons, artificial intelligence and big data, fifth-generation communications technologies, nuclear enterprise modernization, space, missile defense and response force readiness.
The review began soon after Esper took office and built on a similar process he put in place as Army secretary. The process involved personnel from the Office of the Secretary of Defense and the services. It was a line-by-line examination of the budgets of defense agencies and activities.
"We ended up with 21 sessions over the course of about 16-ish weeks," a senior defense official said. The directors of the defense agencies and activities participated.
Esper looked at each organization and each budget item and asked basic questions: Why is DoD doing this? What is the requirement? Should this be done by this agency or one of the services?
The secretary has his own key phrases that boil down to freeing up time, money and manpower for redirecting to NDS priorities, the official said. "It's a long, tough process, but it realized $5.7 billion in 2021 savings that re-prioritize to NDS priorities, and another $2.1 billion that will transfer from defense agencies and activities to the services," the official said.
In some cases, the review called for increases in capabilities. In other cases, it called for cuts. Some legacy systems and equipment that were resident in the Fourth Estate are being cut. Some missions, overcome by events, are being ended. All this money will flow to higher priorities.
Officials said employees should not be affected by the changes. Any changes in personnel can be handled under normal retirements and attrition.
Officials said most of the money can just be transferred. Some will require congressional action. Officials stressed these actions do not involve the combatant commands.
The process is not over. Esper will institutionalize the process under the auspices of the office of the DoD chief management officer.
Right now, officials explained, the services prepare their budgets in accordance with the National Security Strategy. Before submitting them to the Office of the Secretary of Defense for scrutiny, service leaders make tough decisions about what programs or capabilities should have priority. They have a topline number they cannot exceed and the budget submission — usually in August — requires tough choices on the part of service leaders.
However, the agencies and activities in the Fourth Estate do not have the same pressures. They submit their budgets at the same time as the services, but miss the scrutiny that requires taking money from one program to fund one with a higher priority. Esper signed a memo to place all the Fourth Estate agencies into one pot, and the chief management officer would examine the budgets as a whole, shifting funds where they are needed and eliminating duplicative or overtaken capabilities.
Just as a service scrubs its budget before submitting it to the secretary's office, the chief management team will be scrubbing all of the Fourth Estate budget as an entity before it hits the big budget review process in the fall.
Essentially, this means "creating that same management incentive on the Fourth Estate side," an official said. "You got a bill? Find an offset."
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