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SecDef Eyeing Moving Billions By Eliminating Offices, Legacy Systems « Breaking Defense

Defense Secretary Mark Esper meets with instructors during a visit to the Naval Air Technical Training Center, in Pensacola.

PENTAGON: Defense Secretary Mark Esper is looking to move billions in this year’s defense budget away from programs that don’t fit his modernization blueprint, and will ask Congress to kill off aging programs and roles he deems redundant or outdated.

The scope of the cuts, set to be unveiled with Monday’s fiscal 2021 budget rollout, amounts to $5.7 billion, all of which will be moved elsewhere in the budget with an emphasis on missile defense, artificial intelligence, and hypersonic research, defense officials told reporters today.

The effort was announced in August when Deputy Defense Secretary David Norquist signed out a memo signaling he would lead a top-to-bottom review of the Pentagon along with Lisa Hershman, the department’s chief management officer. Esper’s model here is the “night court” process he ran as Secretary of the Army, where he and Gen. Mark Milley — then the Army Chief of Staff, now Chairman of the Joint Chiefs — led grueling reviews that cut or canceled over 180 programs to free up $31 billion over the five years of the 2020-2024 budget plan.

On Wednesday, defense officials previewed progress to reporters at the Pentagon. One official, who asked to speak on the condition of anonymity, said Esper “wanted a more detailed scrub” of the so-called Fourth Estate, which includes 27 agencies like the Defense Intelligence Agency and the Missile Defense Agency. The research offices and back-end development functions the agencies run had an annual budget of at least $106 billion last year, a number that will fall  to about $99 billion if the proposed cuts are implemented by Congress.

Since the August memo went out, Esper made over 130 separate decisions ranging in value “from a couple hundred thousand dollars to a couple hundred million dollars,” the official said. 

The Missile Defense Agency was one of the offices that has seen the most change.

“We did a line by line review of the Missile Defense Agency and we actually did divest significant legacy capability,” from the agency, the official said. The Pentagon told the MDA to “go through and look at some of the investments they were making that really had lessened in importance or were declining,” in order to make cuts and shift money to funding new programs to defend against more modern threats. 

“We were investing in some exquisite capabilities there,” that had outlived their usefulness against new generations of ballistic and hypersonic missiles being developed by China, Russia, and North Korea, a second defense official added. Some of the savings at the MDA has allowed leaders to shift money to investing in the newly announced next-generation interceptor. The program kicked off last fall after the Pentagon cancelled the Redesigned Kill Vehicle program in August once it was deemed too riddled with problems to salvage.

This is all part of “the most significant acquisition reform in years,” Esper said last month, but he’ll first have to get his proposals through Congress, no sure bet at a time of flat defense budgets and the services fighting it out for their share of the budgetary pie. 

“There’ll be contracts terminated, there’ll be less level of effort in certain areas but I don’t think there’ll be any involuntary” separations or layoffs, the second official said. But given the budget will only go from last year’s $738 billion to $740 billion, “we had to look inside our own house to find savings,” the first official said. 

Since the team found $5.7 billion to reinvest in just four months, I asked what they think they’ll find next year. By the sound of it, the program will be even more ruthless the next time around. “We’ve moved out pretty quickly” the first official said, “we’ve already assembled teams to see where to start clean-sheeting, we’ve already started targeting some high-level potential numbers.”

Can they match or beat $5.7 billion? “The Secretary thinks it’s repeatable,” one of the officials laughed, noting that they plan to be more aggressive, and closing entire agencies “is not off the table.”

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