Why DoD’s fighting force is ‘ever shrinking’ despite robust budgets

This edition of On DoD features a long discussion on the subject of Defense reform. Our guest is retired Maj. Gen. Arnold Punaro, who's just written a new book:...

This edition of On DoD features a long discussion on the subject of Defense reform. Our guest is retired Maj. Gen. Arnold Punaro, who’s just written a new book: The Ever Shrinking Fighting Force.

What’s shrinking isn’t the Defense budget. In inflation-adjusted terms, the DoD budget is bigger now than it was during the peak of the Reagan era, but dollar-for-dollar, the nation is getting a lot less defense capability for that spending.

In his discussion with Jared Serbu, Punaro, a former staff director for the Senate Armed Services Committee, amongst numerous other titles, argues there are three main drivers for the change in DoD’s “tooth-to-tail” ratio: Growth in fully-burdened military personnel expenses, a steady accumulation of “overhead” in the Defense bureaucracy, and a decreasingly efficient acquisition system.

A partial transcript of the show follows:

Jared Serbu: General, thanks for being with us. And let’s talk about the book. Just to set this up for our listeners, this is almost a compendium or distillation of various other pieces of advice and observations that you’ve made to defense policymakers and leaders over the years – some in official and some in unofficial capacities. So start us off, if you would, by talking a bit about the experiences that you’ve had over the decades that formed the basis for this book.

Arnold Punaro: Jared, it’s always a privilege to be with you and your listeners. And it really got started for me when I graduated in 1968, which was the peak year of the draft. And I ended up being a United States Marine and an infantry platoon commander in Vietnam, and served with a lot of young Marines that were drafted and did everything that country asked them to do. And it weighed in on me quite heavily that we always need to be prepared for our national security and to make sure our troops have everything they need. During the Vietnam War, we didn’t have a lot of things that we needed to have on the battlefield.

And I fortunately went to work in the U.S. Senate, for Senator Sam Nunn, and was there 24 years. For most of my career, we were working to try to make sure we had what we needed for national defense, including in the very grim decade of the 70s, when there was such an anti-war sentiment, trying to save the volunteer force. So most of my career, and then in industry, has been trying to make sure we have a strong national defense. When I looked at it and kind of looked back over a 45 to 50 year career, both in uniform and government and industry, working as a formal and informal adviser to the Congress and to the Pentagon, and I looked at the amount of money that we were spending. I looked at the fact that in my judgment, we were not getting the bang for the buck we should for the dollars we’re spending. And we are in exact same situation.

When I was on the Quế Sơn mountains in Vietnam, my troops didn’t have hot chow, they didn’t have enough food, they didn’t have dry socks. Some days, we didn’t have the ammunition that we needed. Here we are going up against the pacing threat of China, that’s dramatically improved their military, they’ve improved their technology, they’re on the march economically and diplomatically.

We are spending in constant dollars more than we spent at the peak of the Reagan build up, and yet the force is 50% smaller in terms of active duty: 1 million less active duty personnel, the warfighting units, we have 35 to 40% fewer than we had at the peak of the Reagan build up. I’ve written a lot about this over the years, and I’ve tried very, very hard in a lot of venues to try to improve and reform the processes that we have in the Pentagon and the Congress, which are flat broke, they’re just broken.

And it’s not the people — the people that come to work in the Pentagon, on the hill and in industry come to work every day doing the absolute best job they can for our warfighters and the taxpayers. Former Secretary of Defense Bill Perry told me once bad processes beat good people every day, and we have a proliferation of broken processes in the Pentagon in the Congress. And I said enough is enough. I’ve got nine — soon to have 10 — grandkids. When I look at what China is doing, when I hear what General Milley and General Dunford say, when I hear what people that are on the China commission say, and I realize how far we’re falling behind, I just felt compelled to put it all in in a book and get it out there.

Jared Serbu: One of the reasons I wanted to start with some of that historical context is one of the striking things in the book is that even if the problems are extremely difficult to solve it when you put them all together, they’re at least well understood, right? You mention a few times that a lot of these blue ribbon panels and defense reform commissions over the years have reached pretty similar conclusions.

Arnold Punaro: That’s correct. The great Louisiana senator, head of the Finance Committee, Russell Long, once told my boss Senator Nunn, ‘Sam, don’t solve a problem for people before they know they have one.’

But everybody knows what the problems are in defense. It’s the acquisition process, where we spend close to $400 billion a year and about all you can say is it spends more, takes longer and gets less. It’s DoD’s massive overhead and support structure, which has gone from 5% of the budget to almost 20%. If you add in all the things that really belong to the Defense-wide budget, it’s probably another 10% higher, and you could go on and on. So people know the problems, they agree with the problems. There’s a bipartisan agreement that we’ve got to deal with China. So we’ve just got to kind of tighten our belts and take a deep breath and get on with the reforms that are necessary so that we can get the capabilities that we need for our warfighters to both deter our adversaries, but also if we get into a shooting war, which we never can predict, and we never want to be in again. But unfortunately, history doesn’t give us that luxury, and we’ve got to be ready to win on the battlefield.

Jared Serbu: And you break down the problems into what I think is a pretty useful rubric — those three things that you alluded to: overhead growth, fully-burdened personnel costs and the acquisition system.

Let’s start with overhead. And as you acknowledge, there’s really no commonly accepted definition of what overhead is, but you make a pretty good case and arrive at some estimates, at least, of what the department is spending on overhead. Talk with us just a couple minutes about how you define overhead, and how big you think it is.

Arnold Punaro: You’re right, there isn’t agreement, and people argue about it and want to fine tune it. But look, I come from the business world now. And you’re either on direct or you’re on indirect. If you’re on direct, that means you’re billing somebody for your time, if you’re indirect, that means you’re overhead. And so for me, if you’re not on the warfighting side of the Department of Defense – if you’re not on the tip of the spear, then you’re in the rear with the gear – you’re overhead; you’re support.

It’s pretty fundamental, and even by DoD’s own definition, they would argue that 43%, or over $300 billion of the annual budget is kind of in the support, not forces. And so to me, anything that’s not on the warfighting side at the tip of the spear is overhead and support. And if you just take their own definition and look at the headquarters, and you look at the Office of the Secretary of Defense, you look at the Joint Staff, you look at the defense agencies  — they’ve from one defense agency, the National Security Agency – we now have 28. And those are massive, massive organizations like the Defense Logistics Agency.

Jared, we have over 300,000 active duty military, which are our most expensive personnel, our most highly trained and our most valuable, that are working in positions that are inherently non-governmental. That means those jobs can be done by a defense civilian or defense contractor and frankly, many of them probably don’t even need to be done. That’s a lot of people that we can move from the back offices to the warfighting side of the military. I define warfighting [as] if you’re a cyber warrior, if you’re operating a lethal drone, you’re a warfighter. The Business Executives for National Security, when they look at this, they are a lot less charitable about the 60/40 split — they think the back office stuff is much closer to over 50% of everything DoD does.

Jared Serbu: One of the things that the book does a nice job of is giving a lot of historical context and pointing out that, for example, the Joint Staff did not always have 5,000 employees. There were not always 40,000 people assigned to combatant commands. Give us your best sense of how that kind of accretion happens over time. And it’s not because of malice – it’s not because people are trying to waste money. How does it happen?

Arnold Punaro: Well, you know, that’s a terrific observation. And I struggle with this, because these these are a lot of warfighters. And I say about the warfighters out in the field that they’re magnificent warriors. When they get back in the rear, they become magnificent bureaucrats.

And it’s a lot like a vine in my own home state of Georgia we call kudzu. Decades ago, the Soil and Erosion Service brought this vine in to stop erosion of the soil. Then it became one of the most noxious weeds ever produced, and then they banned it completely. We called it the vine that ate the south, and it would swallow up buildings and telephone poles and roads.

[Former Defense Secretary James] Forrestal, when he first started OSD, he had maybe 40 people, not the over 5000 they have today. It just is like kudzu, it starts growing, it starts encumbering, it starts smothering everything. They add a little bit at a time, they don’t add it all at one time. And so it’s just this inexorable climb of overhead. Layers of management – the over 30 layers of management from a junior action officer in the military departments to the top of the Pentagon. The Pentagon is so hierarchical, if you have a three-star, he’s going to have two two-stars working for him, each two-star is going to have two one-stars, each one-star is going to have two colonels, and so on – you have this pyramid.

So the bureaucracy, like kudzu, just grows over time until it just suffocates the organization. I think we need to just clean all that out. If you look at the acquisition area, we’ve got over 154,000 people now working in acquisition, and we’ve got rules and regulations of 50,000 and 75,000 pages. We think that we’re going to be able to move with speed and innovation with that kind of regulation and bureaucracy?

For example, in the old days, if you look at the time from contract to operational for our tactical jet fighters, it took about five years. It now takes 30 years. Guess who’s now doing it in five years? China. Guess what commercial industry does when they have a new airplane? It’s under five years. A new automobile, it’s under five years. And so our Department of Defense has allowed itself to get out of sync with the world that we live in.

They focus on inputs: everybody’s yelling and screaming about how the top line’s got to go up, we need another 3% we need another 5%. My argument is we need to focus more on what we get for what we spend, not how much we spend. We’ve got to change the output focus in the Department of Defense so that we do everything better, faster and cheaper than China.

Jared Serbu: Let’s stick with acquisition for a bit since you brought it up. It’s also a very well-studied problem. And there have been actually some reforms in various NDAAs over the past five years. How far have those gone toward fixing the more systemic problems that you see in the acquisition system, and how much more needs to be done?

Arnold Punaro: Well, certainly there’s been no lack of trying in the Congress and in the Pentagon to try to reform the acquisition process. It’s a life’s work, and you’ll never you’ll never get it done. Bill Perry tackled it when he was Secretary of Defense, Carl Levin and John McCain tackled it, John McCain and Mac Thornberry tackled it, Jack Reed and [James] Inhofe. And the last couple of administrations, between Ash Carter, Frank Kendall and Ellen Lord, they made a lot of good progress, like you said, but the point is not how far we’ve come, but how far we still have to go.

If you look at the big picture output, for example, in Navy shipbuilding, the shipbuilding budget has gone up 70% and the number of ships we buy has gone down 70%. I remember when Norm Augustine wrote Augustine’s Laws — he predicted decades ago that the cost of weapon systems is going up so rapidly that we’re going to get to the point where we can only afford one tank, one ship, one plane, one truck, and people just laughed. Well guess what? We’re pretty close to that right now.

One of my other hats is chairman of the National Defense industrial Association. We’re getting ready to kick off and launch an emerging technologies Institute, which is going to be an independent objective organization. We’re going to make a huge financial investment, because we think these technologies are so important to our country’s economic future, not just our military future. And so we want to push the government, push our industry, push our economy, that’s the future. And by the way, in these emerging technologies, if you go to Silicon Valley, if you can’t get it turned around in under a year, you’re not going to survive. And so that’s the kind of cycle time that we need to basically put into our government procurement system.

Jared Serbu: Just one more question on acquisition reform, because it seems to me there’s kind of two schools of thought on this. One is, you do need to do continuous improvement and continue to refine the system and get inefficiencies out. On the other hand, if you’re reforming the entire system, or big chunks of the system, in every single NDAA, it leads to reform fatigue after a while. And so the thinking along those lines would be maybe give people a few years to have a stable system to work within and learn how to use and learn how to optimize. Do you see a tension there?

Arnold Punaro: Well, I do, and I think I lean on the side of reform fatigue. I don’t think we need to change the whole system. I don’t think we need to have massive reform, I think we need to attack the four or five key nodes.

First, it’s a requirements process, get rid of the iron majors in the Army that develop requirements, I say, facetiously that if the Army could get away with it, they’d want a nuclear powered tank that can fly itself to the battlefield. The requirements people gold plate the requirements without any regard for technical feasibility or cost affordability. You’ve got to reform the way they do requests for proposals. They always are just looking at the upfront cost, they’re not weighing the sustainability costs. Why do people buy reliable automobiles? They cost a little bit more upfront, but guess what, they save fortunes on the maintenance because they never need maintenance. DoD needs to adopt that model. And there’s so many things they can do. You don’t need to change the wiring diagrams or break up R&E and put it back together. And we’ve got good people. I mean, Heidi Shyu, who’s been nominated for Research and Engineering, you couldn’t get a better person to kick some butts in the Pentagon and push people on technology, and others.

So again, it’s not the people, it’s the processes. We’ve got to get better contracting procedures and quicker contracting procedures. The Ford Class carrier, which is not even technically operational yet, has been in process for over 15 years with massive cost overruns. I mean, you can fix that kind of thing. You don’t need to reorganize the Pentagon or the Congress.

And guess, what Congress is broken. It’s as broken is the acquisition process. They never get their work done on time. We’re going to start in a continuing resolution again this year, we’ll be lucky to get the defense and appropriation bills done by Christmas. And you know, when’s the last time we had all 12 of the annual appropriation bills done on 1 October? It’s been 25-plus years. And so these things can be fixed. We don’t have to reorganize anything. We just have to get people with some backbone, you know, to tackle these tough issues.

(This is a partial transcript. To hear the full conversation, click the audio link at the top of this page). 

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