WASHINGTON – The Defense Department has unveiled a surprising new plan to start reining in its supersized budget: After nine years of unbridled war spending, the military will finally start bargain hunting.
Defense Secretary Robert Gates told reporters at a Pentagon news conference Tuesday that the military will begin factoring in affordability before committing to a purchase. Any contracts exceeding $1 billion will be scrutinized in particular for ways to keep costs down. And when looking to spend money, the military will try to do more comparison shopping, Gates said.
The initiatives are part of Gates' goal to find $100 billion in budget fat in the next five years, money that he says is needed to care for U.S. troops and modernize weapons.
Such steps may seem like common sense in most American households, now trying to survive the worst economic downturn since the Great Depression. But the Defense Department has mostly escaped any belt-tightening in the past decade, as it committed tens of thousands of troops to Iraq and Afghanistan. Lawmakers in Congress, meanwhile, were eager to support the troops.
The Pentagon now spends roughly $700 billion a year, which includes the cost of both wars. Of that amount, about $200 billion is spent on goods like new weapons and fuel and $200 billion goes toward services like weapons maintenance and computer networking.
Defense officials and budget hawks say the heightened spending in recent years prompted a feeding frenzy within the defense industry. Meanwhile, there was minimal oversight from the Pentagon, which was more focused on equipping troops on the battlefield than on comparing costs.
Gates, who is expected to retire sometime next year, has predicted that defense spending will begin to level off as the wars in Iraq and Afghanistan wind down. In order to ensure that key programs don't suffer — health benefits for troops, for example, and rebuilding Army vehicles worn-out by desert warfare — the military will have to find ways to do business smarter, he says.
Gates has already announced a plan to disband an entire headquarters in Norfolk, Va., known as the U.S. Joint Forces Command. He also wants to cut the general officer corps, which he says has grown too large and expensive.
His proposal announced Tuesday takes direct aim at the defense industry and the approximate $400 billion a year it earns in contracts for goods and services.
Among the new requirements for future programs is that "affordability will be incorporated right at the beginning, as a firm requirement for each new program," Gates said.
The goal, he said, will be to avoid starting programs that later prove too expensive and not worth their cost. He gave the example of the half-billion dollar presidential helicopter program, which was eventually canceled by President Barack Obama.
The Pentagon acquisition chief, Ashton Carter, said a program's affordability hasn't been a requirement in recent years because cost was no object. When problems arose on a contract, more money was thrown at the problem to correct it, he said.
That's not the way most of us spend money, he said. "You don't buy the car that you fantasize about," Carter said. "You first check how much money you have before you buy a car. And we need to start doing that."
Whether Gates' cost-cutting efforts will succeed remains unclear. The defense industry has a host of powerful lobbyists, and Congress has been fiercely protective of any defense spending within their districts because military spending creates jobs.