Pentagon’s zero-based review has freed $5 billion so far

Defense Secretary Mark Esper says the Pentagon freed up $5 billion over the last four months as part of a review of its spending to further align with the National Defense Strategy.

“By decreasing overhead, divesting legacy activities and reducing lower priority programs, we were able to invest more in the warfighting requirements of the services,” Esper said during a speech Saturday at the Reagan National Defense Forum in Simi Valley, California.

The Defense Department started its review in August by looking at its fourth estate — the military agencies that do not fall under the military services.

Esper said DoD will continue to look for savings by expanding its review to other aspects of the military.

“This is just the beginning,” Esper said. “I expect every leader in every service and the office of the secretary of defense and the joint staff and in the combatant commands to review their budgets with the same rigor and to reprioritize to support the National Defense Strategy.”

Esper added that DoD will continue the review process early next year.

DoD’s zero-based review is led by Deputy Defense Secretary David Norquist. Norquist signed a memo on Aug. 2 directing DoD to do a budget review for 2021 to 2025, and to make adjustments to 2020 where feasible.

“The review will also support a longer-term focus on structural reform, ensuring all defense-wide activities are aligned to the National Defense Strategy while evaluating the division of functions between defense-wide organizations and the military departments,” the memo states.

The memo informed defense agencies and military departments that the offices will contact them directly for further guidance and collect data to inform weekly decision meetings, which will be chaired by the defense secretary.

“We will begin immediately and move forward aggressively, as all defense-wide organizations, appropriations, funds and accounts will be included in the zero-based budgeting review,” the memo states. “Given the variety of defense-wide organizations and functions, we will tailor the review approach as needed. The review will consider all ideas — no reform is too small, too bold or too controversial to be considered.”

The Army started DoD’s push for a budget review with its “night court” process, which plans to cut $25 billion in old weapons over the next five years to reinvest into modernization.

Congress has some issue with the way the Army is reinvesting its funds.

The Senate’s 2020 defense appropriations bill gives the Army a slap on the wrist for its night court method, telling the Army that it understands “the disconnects between budget cycles and strategy changes,” but it’s concerned about the $10 billion the Army is targeting for realignment through the process in 2021.

Esper asked for lawmakers’ blessing in how it reinvests funds.

“When our budget comes to the Hill next year, I ask you to support our proposals and enact the legislative changes needed to get these reforms across the finish line,” Esper said.

While DoD is saving some money, Esper took a moment to remind Congress that the Pentagon is currently not getting the maximum funds it could due to the current continuing resolution.

Esper said DoD is operating with a budget $19 billion below the topline outlined in the budget deal agreed to this summer.

“We continue to lose nearly $5 billion in buying power for every quarter we remain in a continuing resolution,” Esper said.

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