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II-25

FY 1983 SRB Commitments for Zones Manned
at 100% of Desired Levels

298

II-26

Aviation Career Incentive Pay Expenditures

306

II-27

Officers Qualified for Continuous ACIP as
of End of FY 1981

307

II-28

Estimated Savings if ACIP Rates are Reduced
for Members with More Than 12 Years of
Service

308

EXECUTIVE SUMMARY

AND

PERSPECTIVE

EXECUTIVE SUMMARY

The Office of the Secretary of Defense (OSD) _Task Force of the President's Private Sector Survey on Cost Control has completed its review of OSD operations and selected Department of Defense (DOD) activities. The mission of the DOD is to deter war and, if deterrence fails, to conclude any conflict on terms favorable to the United States. All functions in DOD and its component agencies are performed under the direction, authority, and control of the Secretary of Defense.

DOD's total obligational authority for fiscal year 1983 is currently estimated to be $239.4 billion. This includes $61.7 billion for payment of military salaries and retirement; $66.2 billion for operations and maintenance, including civilian salaries; $24.8 billion for research, development, testing and evaluation; $80.2 billion for procurement; and $6.5 billion for other expenditures.

DOD employs two million military personnel in approximately 5,600 locations throughout the world. There are almost one million reservists and more than one million military retirees. Spouses and dependents of active duty, reserve, and retired military personnel total more than seven million. In addition to the total military-related population of 11 million people, there are about one million civilian employees of the Department of Defense and an estimated three million employees of defense contractors. The policies and programs of the Department thus directly affect the lives of more than 15 million people.

This Task Force reviewed OSD as to both the functions performed within the Agency and its responsibilities for monitoring and controlling functions common to the military services: the Air Force, the Army, and the Navy (including the Marines).

The OSD Task Force did not attempt to assess the appropriate budget level required for DOD to fulfill its mission. Rather, the Task Force sought to identify cost saving opportunities that would enable DOD to fulfill its mission in a more cost-effective manner.

The OSD Task Force analyzed defense cost saving opportunities in the following areas:

logistics

weapons acquisition

retirement provisions

health programs

personnel and compensation
financial controls

Opportunities for Cost Savings and Revenue Enhancements

The OSD Task Force review identified 40 cost savings and revenue enhancement opportunities. When fully implemented, these recommendations could produce annual savings and revenue of about $19 billion (in 1983 dollars), plus one-time savings of nearly $5.0 billion, offset by about $1.8 billion of one-time implementation costs. It should be noted, however, that it will take several years to realize fully the savings of some of the more significant recommendations.

In no case do we recommend diminishing the defense program. The OSD Task Force is in full agreement with the need for a strong national defense posture. All recommendations are made with full appreciation of this overriding need.

Almost 40 percent of the recommended savings can be derived from improved management of the weapons acquisition process. The OSD Task Force analyzed the process only. The issue of specific weapons choices was not addressed since this was beyond the competence of the review team and not relevant to our charge.

Overall Findings

The

Management of OSD and DOD is an awesome task. Department has more employees and more locations, and controls more dollars, than any other free world organization. As would be expected in a democracy, DOD is under constant scrutiny by Congress, the Office of Management and Budget (OMB), the White House, the media, special interest groups for and against its activities, its employees, its retired employees, business leaders, and the general public.

Two special circumstances impede efficient management and decision-making, as viewed by private sector standards. First, the military services have never really bought into the need for central management by the Secretary of Defense. DOD has been in place for 35 years, but the services still resist its authority. Secondly, Congress continually constricts DOD's management prerogatives. Weapons choices, base deployment, and other major management decisions cannot be made in isolation from home district political pressures from throughout the country. This creates an environment which favors expansion of programs; the management efficiencies of contraction or consolidation are seldom attainable.

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