As the House Armed Services Committee prepares to release its reforms for the Defense Department in the 2017 defense authorization act, a conservative think tank is laying out challenges for the next defense secretary.

An April 19 report by the American Enterprise Institute puts the Pentagon’s burgeoning civilian workforce and service contract spending in its crosshairs for 2017 reforms.

“The Pentagon can continue down the ‘groundhog day’ approach to the two defense civilian workforces, paying lip service to change with minimal across-the-board reductions every few years that mysteriously evaporate over time and fail to unleash the power of decentralized management. Or, Congress and Pentagon officials can begin the hard work of the next era of defense reform,” the report states.

The report, authored by AEI Fellow Mackenzie Eaglen, states since the mid-2010s DoD’s workforce grew, while the military shrunk. The military has decreased its numbers by 5 percent, as the civilian workforce added 15 percent to its numbers.

Eaglen suggests giving DoD buyout authority to reduce its headquarters staff. The report also calls for changing the department’s personnel system. The Pentagon should implement successful personnel management and retention policies, such as standardized exit surveys and paperwork reduction programs, the study stated. Eaglen wants DoD to adopt similar personnel standards as companies out in Silicon Valley.

Eaglen said the “unnecessarily large” civilian workforce is detracting from the Pentagon’s reason for being, which Eaglen said is the “production and employment of hard combat power in the service of deterring and winning wars.”

This isn’t the first time DoD has heard this criticism. Last November, defense experts testified before the Senate Armed Services Committee on the size of the civilian workforce.

“The growth in Defense infrastructure has been continuous. The tendency has been to add, rather than subtract. As we have added more staff, more layers and more infrastructure, we have slowed the decision process, expanded the number of players and made the overall system more risk adverse, at a time when we need to take more risk and make quicker decisions,” Arnold Punaro, a member of the Defense Business Board, said during the hearing.

The DoD is spending more now than it spent during the peak of President Ronald Reagan’s buildup of the military. However, war fighting forces are 40 percent to 50 percent smaller, Punaro said. He added that infrastructure within DoD is costing about $240 billion and using more than 1 million people.

DoD took some action to alleviate the problem last September when it mandated a 25 percent cut to Defense headquarters staff. But, Eaglan’s report criticized the cut.

“A department that yearly decries the foolishness of potential across-the-board sequestration cuts should not then turn around and apply across-the-board cuts to the defense civilian workforce,” the report stated.

DoD, Congress overlook expenditure growth in contracting

The armed services committees have been slowly changing the way DoD buys weapons in an attempt to increase efficiency and save money. But, Eaglen’s report states both the department and Congress have overlooked the growth in expenditures for service contracts.

Service contracts can range from IT services to commissary workers.

The study urges the Pentagon to designate the deputy chief management officer to oversee baselining and standardizing of service contract data.

Eaglen’s report states one reason service contract expenses have gotten so out of hand is DoD’s inability to track them.

DoD has come under fire in the past for dragging its feet on creating a service contract reporting system. Congress charged DoD with creating an office that would take in reporting requirements.

In 2014, Sen. Claire McCaskill (D-Mo.) wrote to DoD that the department was using four different contract management systems that left $58 billion of the $187 billion in service contract obligations unreported in 2012.

The policy requires regular reporting and the use of an enterprisewide contractor reporting application.

DoD took some action on the measure in January by creating new “expert” positions to preside over each of the services sectors and moving authority approval from the Office of the Secretary of Defense to the military acquisition chiefs for services contracts worth more than $1 billion.

The study also calls for partnerships with companies like Amazon to create a better reporting system.

“Much like DC’s Metro system, large, long-term fixes will be difficult without shutting down part of the reporting system to sit down with those responsible for the purchases of services and consider the problem anew,” the report stated.

TRICARE on Congress’ reform list

One area that has been on Congress’ reform list for the past few years is TRICARE. House Armed Services Committee staffers confirmed that some health care reforms will be encompassed in the total 2017 defense authorization bill. But, there is no guarantee those reforms will still pass the Senate and get the signature of the President.

Eaglen’s study calls for adopting many of the reforms recommended by the Military Compensation and Retirement Modernization Commission, a panel tasked with looking into military health care. The commission largely called for a complete overhaul of the TRICARE system.

Eaglen suggests a complete reform of TRICARE similar to the Pentagon’s recent personnel reforms dubbed the Force of the Future.

“Increasing the flexibility of the military medical personnel system to allow for training sabbaticals and midcareer entrance by qualified civilian medical personnel could appreciably bolster both the TRICARE system and the military medical community,” the study stated. “Also, moving from a hidebound, pay-for-procedure health care structure to a value-based, continuum-of-service model would empower beneficiaries to manage care choices, as their private-sector equivalents can.”

Not everyone agrees that TRICARE needs an overhaul, however. Executive Director of AMSUS and former Navy Surgeon General Mike Cowan told Federal News Radio TRICARE is a successful health care system.

Cowan said there are always some tweaks that are needed, but the system as a whole does not need an overhaul.

Yes, some parts are expensive and that includes military treatment facilities. But, Cowan said those are sunk costs that are needed for readiness in a time of war.

Eaglen’s study admits the system works well. “TRICARE recipients pay only 5 percent of every dollar spent on the Tricare system, in contrast to an average private-sector rate of 28 percent,” the study stated.

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