Work orders new effort to cut Pentagon’s administrative layers, reassess service contracts

Deputy Defense Secretary Robert Work has already made it clear on numerous occasions that he thinks there are significant savings to be wrung from Pentagon back-office operations. But his latest initiative appears to be directly targeted at reducing headcount and addressing the perceived problem of too many supervisors and organizations managing too few front-line workers.

In a July 24 memo titled “Implementation of Institutional Reform Opportunities,” Work tasked DoD’s deputy chief management officer, Peter Levine, to come up with a “delayering” strategy for all of the organizations that fall within the sprawling Office of the Secretary of Defense, including the Defense agencies such as the Defense Information Systems Agency and Defense Logistics Agency and field activities like the DoD Education Activity and the Defense Technical Information Center.

Work told the DCMO’s office to come up with an implementation strategy for a “rationalized” Pentagon organizational chart after it conducts a thorough review of supervisors’ spans of control and the ratio of supervisors to rank-and-file employees.

The memo didn’t specify a target date for completion or the amount of savings DoD hopes to generate, but a 2014 study by the Defense Business Board estimated the department could save between $5 billion and $8 billion per year by executing the same two steps Work now is ordering: delayering the organization and increasing its remaining supervisors’ spans of control.

DBB arrived at its estimate after examining case studies involving large private sector organizations, noting, for example, that IBM trimmed its overhead by reducing non “non-core” work from 45 percent to 30 percent and cut $9.5 billion in costs over four years. IBM, incidentally, also eliminated 120,000 employees.

Whatever plan the DCMO comes up with to flatten the department’s administrative structure will be reviewed by joint panel of DoD officials, but Work said he will serve as the final arbiter of any disagreements.

This is the latest in a series of efforts Work has ordered to cut administrative spending.
In 2013, he ordered all defense agencies and military services to cut their “headquarters” expenditures by 20 percent, though some members of Congress believe DoD components have used smoke and mirrors so that those cuts appear only on paper, so the Senate’s proposed version of next year’s defense authorization bill would cut actual headquarters funding by 30 percent.

And in March, Work said he was leading an effort to target spending on six back-office business areas: human resources, procurement, logistics, service contracting, real estate and property management, health care and financial management.

In the same July 24 memo, the deputy secretary also said he was aiming to “improve outcomes” on service contract spending by ordering the implementation of Service Requirements Review Boards. Their task, he wrote, would be to make sure DoD is validating its need for service contracts in a standardized way. The DCMO will also be in charge of drawing up a governance plan for how the boards will operate and scrutinize contract requirements.

“The implementation of these opportunities may challenge many institutional interests, but it is essential that we undertake these efforts to achieve greater effectiveness and costs savings and to better preserve our warfighting capabilities,” Work wrote. “I expect and appreciate your full support, leadership and personal engagement as the department implements these management improvements.”

This post is part of Jared Serbu’s Inside the DoD Reporter’s Notebook feature. Read more from this edition of Jared’s Notebook.

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