managers, the services, contractors and sponsoring members of Congress protect them from challenge. Special pay and benefit provisions put in place when military compensation was unduly low are not corrected long after military pay has been brought competitive with civilian pay, both in Government and the private sector. Retirement provisions are not looked at anew, Contractors, large and small, regard continuing weapons and military base contracts as their right. Civilian Government employees and their unions do not necessarily look with favor on cost saving opportunities from contracting out to the private sector. Other recommendations which would reduce staffing are resisted. Members of Congress, local communities and local businessmen are strongly protective of the money spent on local bases, irrespective of their military need or cost-inefficiency. The services cherish historic roles and budget shares, while resisting Defense-wide adaptation to changing world circumstances. They feel they must have their own laboratories and hospitals, and must manage their own housing and bases. The private sector does not flinch from declaring its piece of the defense pie sacrosanct, as the above list shows. It is human nature that groups should attempt to preserve historic entitlements. It is not necessarily in the national interest. A group may have good reason to feel entitled. That does not preclude asking whether the price being paid is too high. The conditions that created a particular program may no longer apply. It is time to look at these entitlement problems in light of this Government's growing deficits, which threaten our economy and overall financial stability. Organization DOD is probably the most complex organization in the free world today for several reasons: DOD has great difficulty establishing long-range objectives when its planning horizon is the end of a current Presidential term or, worse, the next Congressional election. The personnel challenge alone involves managing Defense The economics of the DOD are staggering. 25.2 percent of total Federal outlays; approximately $800 for every person living in The nearly $100 billion budgeted for major weapons in 1983 is more than the gross revenues of the largest corporation in the United States. The outlay forecast in FY 1983 for military retirement pay alone in the DOD is $16.5 billion, approximately equal to the gross revenues of the 16th largest corporation in the Fortune 500. The political impact of defense spending puts - DOD employs 105,000 engineers and scientists DOD's organization is, by necessity, unusual. This derives, in part, from the need to provide civilian control over a military function. The competition among the services, and the relationship of the services and their Secretaries to the Joint Chiefs of Staff (JCS), to the Commanders-in-Chief, and to the Secretary of Defense all contribute to the peculiar organization structure. These relationships have been carefully derived, however, and the OSD Task Force has made all organizational cost saving judgments in full recognition of the reasons why these relationships were established. Ever since the creation of DOD, the services have fiercely protected all functions for which they were historically responsible and resisted attempts to consolidate functions, whether in OSD, in unified commands, or in specified commands. These reactions are generally healthy. Service competition ensures that varying viewpoints will be fully weighed by the Department, the Administration, and the Congress, before fundamental questions are resolved. The Frequently, however, the facts may indicate that noncombatant functions can be done better if consolidated, and that consolidation would be more cost-effective. National Security Act of 1947, as amended, gives the Secretary of Defense the responsibility and the authority to provide for the performance of any noncombatant supply or service activity common to more than one military service by one agency (or such other organizations as he considers apppropriate), whenever it is determined to be more effective, economical, or efficient. A number of the OSD Task Force recommendations urge operational consolidation, but all such recommendations are consistent with military management of military functions. These noncombatant consolidation recommendations are made where it is felt that costs can be reduced and effectiveness improved. These consolidation recommendations do not confuse consolidation with centralization. In some cases, consolidation and decentralization may be appropriate, but decentralization by service may not be the most effective way to accomplish operational efficiency. Some of the OSD Task Force organizational recommendations are far-reaching and novel, to the extent that anything can be novel in this much-studied department. Others have been adequately studied, and can be readily implemented. Recommendations with respect to weapons acquisition management (p. 134) and overall DOD organization (p. 16) are long-range in nature, but very important. Their cost saving potential is significant. The OSD Task Force believes they will enhance effectiveness, that they are directionally correct, and that they can be accomplished. (Nonetheless, they require analysis beyond that which could be accomplished by this survey.) Management Information It is evident that management information is not very usable throughout the Federal Government. It is for this reason that the Reform '88 program was announced by the White House in 1982. This deficiency is especially evident when reviewing the information available in OSD. In part, this derives from the structure of the U.S. Budget. The line item analysis required for construction of the budget is not very useful as a management tool in an organization as large and complex as DOD. Despite this deficiency, the importance and visibility of DOD's budget require the continuing attention of the Department's management. Further, budgets for two to three years are under detailed scrutiny at all times. Since the budget is not a useful management tool and management information is not readily available otherwise on an ongoing basis, great reliance is placed upon special studies. This is often frustrated by the tendency to make no firm decisions in the face of the slightest controversy, resulting in sequential similar studies without resolution. For example, from the first Hoover Commission in 1949 through a subcommittee report of the Senate Armed Services Committee in 1982, there have been more than 20 studies of consolidation, coordination, and regionalization of the Department's health care systems. No definitive action to resolve the obvious problems has taken place, but the studies continue. Similarly, there have been many studies concerning depot consolidation and maintenance consolidation. These studies are quite costly to perform, yet resolution of the problem is continually deferred. Archaic data processing systems are documented in this and other task force reports of the President's Private Sector Survey (PPSS) on Cost Control. This situation exacerbates the problem. In the course of the survey, the OSD Task Force was unable to secure satisfactory data with respect to base consolidation, Government-furnished materials, Governmentfurnished equipment, base support costs, full health care costs, etc., because of the inadequacies of the management information. Further, it was noted that while OSD needs a great deal of management information from the services in order to perform its planning and control function, it frequently does not have ready access to the data. Budget The appropriations for DOD, the services, and OSD for the past ten years are presented on pages 11-15. For FY 1983, estimated appropriations total $239.4 billion. Caveat It comes as no surprise that an organization with a budget of almost $240 billion and with more than three million employees provides significant cost saving opportunities. The issues raised here did not develop overnight. Many are rooted in the years before DOD was created. Many reflect the natural tension that exists between the Legislative and Executive Branches. Some of the issues recommended here have been proposed by DOD in the past, but were rejected or blocked by Congress. In those cases, the OSD Task Force urges reconsideration by Congress and supports DOD's position. The OSD Task Force was asked to look for cost savings opportunities. By its nature, a report such as this is critical, focusing on areas in need of correction. It cannot be construed as a report card evaluating the performance of OSD or DOD. The OSD Task Force has been impressed by the quality and the accomplishments of the civilian leadership of DOD |