By Jason Miller
Executive Editor
Federal News Radio

By the end of August, military services and agencies will receive a complete guide to how the Defense Department plans to save billions of dollars.

Beth McGrath, DoD’s deputy chief management officer, said Tuesday a new strategic management plan will bring together all the efficiency initiatives, plans and milestones.

“In the military department’s strategic priorities there are seven goals,” McGrath said during a panel discussion with the CMOs of the services in Arlington, Va., sponsored by Government Executive. The goals include business items, the total workforce mix, the contingency business operations, financial auditability, acquisition, the IT infrastructure, including data center consolidation; along with maximizing the utilization of the infrastructure and reducing transaction time. “We are looking at all areas of the business,” she added.

Over the past year, the services and the agencies have said they would cut $100 billion from their operating costs and move most of it to mission-critical needs to help make up for budget reductions.

McGrath said she has been working with DoD Chief Information Officer Teri Takai on the IT strategy, with an end goal of taking cost out of technology.

“It is not just as simple as reducing your footprint by X or terminating a particular system,” she said. “I really think it is, ‘What it the business value, what is the business outcome you are trying to achieve when I’m investing in this new thing?’ And what is the legacy footprint you are trying to eliminate?”

She added the plan will help “drive the change management” because DoD needs new ways of doing things.

“There is opportunity to save money in the IT space, taking a different approach to the infrastructure, taking a consolidated approach, ensuring that we are utilizing the capacity at our DISA [datacenters] and eliminating and rationalizing our legacy environment and taking a different approach to our end-to-end business processes,” McGrath said. “If we don’t enable the whole conversation, then the probability of really saving money or optimizing your business environment decreases.”

Easier cuts already made

IT was part of the “low-hanging fruit” cost cutting that McGrath and other service chief management officers suggested in 2011, she said, and much of the IT and other back-office savings will come to fruition in 2012. McGrath said she’s working with DoD comptroller Robert Hale on a review of the first round of efficiency initiatives.

“What Secretary Hale and I have done is ensure each one of the components have plans together, specific milestones and targets to achieve their efficiencies, and ensure they are on the path to achieve those,” McGrath said. “We are doing the follow-through to say, ‘What is your plan to get there?’ And we will be tracking and monitoring those as we go through the 2012 fiscal year.”

The reviews started in June and she said she expects the first report to be out by January.

“Most of the efficiencies are targeted to start in the 2012 timeframe, but certainly the civilian workforce piece has been on everyone’s mind” she said. “How will we get down to the FY 2010 levels without involuntarily separating our personnel. That has been very much a focus in 2011, but most of the monetary efficiencies are happening in the 2012 timeframe so we are trying to ensure they have credible plans in place so they can execute against the 2012 targets.”

Total manpower costs on the rise

The personnel reduction issue is giving all the services and DoD agencies trouble.

Robert Work, the Navy’s chief management officer, said manpower costs have risen 27 percent since 1998, but inflation and the Navy’s budget has not kept pace.

Work said the personnel changes have garnered high-level attention across the department.

Deputy Defense Secretary Bill Lynn will lead task force of service chiefs, who will report to Defense Secretary Leon Panetta, he said. There will also be working groups at assistant secretary and undersecretary levels, “so everyone is involved,” he added.

“We are going to look at this hopefully in a cohesive and holistic fashion and try to come up with a smart way to go about containing manpower costs. It’s premature to talk about what those choices will be, but believe me it’s a focus of the secretary and deputy secretary.”

But while this working group is only at the beginning stages, the services must reduce the size of their workforces to 2010 levels by 2012.

The Air Force instituted a hiring freeze after replacing departing employees on a 2-for-1 pace didn’t do enough, said Erin Conaton, the service’s chief management officer and under secretary.

“That helped us make some progress, but not enough,” Conaton said. “So while it’s unfortunate and we’d rather not do it, the 90-day hiring freeze will allow us to get to that target that we’ve been set. And then, once we reach that target, we will look at some rebalancing so we are putting our people toward the highest strategic priorities of the workforce.”

She added in the near future the Air Force will figure out what its top position priorities are and will hire only in those areas.

The Army wants to reduce its civilian workforce by 8,700, mostly by having its commands shed positions. Joseph Westphal, the Army’s under secretary and chief management officer, said the service, like the Air Force and the Navy, must be careful not to cut personnel too quickly.

“If you cut end-strength rapidly right now, we will basically have to RIF soldiers coming out of deployments,” he said. “We can’t cut the force that quickly. We need to keep assessing soldiers. We need to have a balance.”

He said the Army has worked with the Secretary’s office to come up with an approach that works best.

Training and development are key

At the same time, Westphal and others said, workforce development and training remain among their highest priorities.

DoD is one of the few agencies to have line items in its budgets to pay for training and development.

“We have to keep the focus on the quality of our people, retaining the people with the best and most expertise and continuing to invest in peoples’ professional development going forward,” Conaton. “I worry about people who are considering a career in federal service, that there are a lot of messages out there that would lead people to believe this is not a valued or valuable career path.”

She added the Air Force needs to look at this as an opportunity to reshape its workforce.

“We are not getting rid of everything we intended to do, but it’s very hard with an organization as large as these departments are to think about strategically moving people around based on areas of greatest mission needs,” Conaton said. ” But that is what we are trying to do. The other thing we are trying to do to the maximum extent possible is to not have to go to involuntary measures to get to our targets.”

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