Lawmaker's Plan to Trim Pentagon's Back Office Hits Headwinds

The House Armed Services chairman’s trial balloon for downscaling Defense Department offices “not directly related to the warfighter” has been welcomed as a conversation starter that may not be fully thought through.

Rep. Mac Thornberry, R-Texas, earlier this month unveiled two draft bills aimed at reorganizing and trimming the Pentagon’s so-called “Fourth Estate”—its departmentwide auditing, finance, procurement, human resources and information agencies.

“As one expert has said, 'the Fourth Estate is untouched by human hands,’ ” Thornberry said during an April 17 hearing at the start of consideration of the 2019 National Defense Authorization Act. “Yet, this portion of the Department of Defense spends about 20 percent of the budget, includes about 25 percent of the civilian workforce, and hires about 600,000 contractors.”

In the effort to free the Defense budget’s newly replenished funds “for the warfighter and to make the department more agile and innovative in facing the wide array of security challenges before us,” Thornberry said, “we cannot neglect to examine this large portion of DoD.”

His two bills would combine some statutes and shuffle or eliminate components of such offices as the Defense Technical Information Center, the Office of Economic Adjustment, the Test Resource Management Center, the Washington Headquarters Services, the Defense Human Resources Activity, the Defense Technology Security Administration and the Defense Information Systems Agency.

"Did you know that in the Department of Defense there are 60 chief information officers” at the Senior Executive Service level? Thornberry asked reporters on April 17. "Is it any wonder that we have a challenge in getting our information technology act together?”

At the hearing, Thornberry cited as an example the “Air Force not taking care of test resource management. We create a new office to oversee it rather than hold the Air Force accountable,” he said. “We’re reacting to a problem by creating a new process or new bureaucracy.”

The committee’s ranking member, Rep. Adam Smith, D-Wash., applauded the bill to accelerate the pace of acquisition reform, but said he had “serious concerns” with the Comprehensive Pentagon Bureaucracy Act. “It appears this proposal could do serious damage to DoD’s information infrastructure, testing ranges, and community support, as well as the basic DoD functions in the National Capital Region by eliminating critical agencies in one stroke,” Smith said. “Those are important functions that I don’t think we should discard if we haven’t done careful study and analysis. It’s also important that we consider the impact on our men and women in uniforms’ ability to do their jobs and their quality of life, as well as on thousands of jobs across the country.”

The Pentagon, under its new chief management officer John Gibson, is reviewing the departmentwide functions in Thornberry’s sights, Deputy Defense Secretary Patrick Shanahan told reporters at an April 24 luncheon. “The Fourth Estate is an area I have been spending an awful lot of time in,” the No. 2 said, citing hope for modernization and boosts in productivity.

Shanahan said he doesn’t want this effort to be viewed as a “people problem” or as a way to reduce the workforce. “There is this assumption that there are all these people standing around with their hands in their pockets and not working hard,” he said. “What we find is we have processes and management systems and [information technology] systems that have evolved over years and years that were never designed to scale to the size that we are, and so people are stuck in processes that … aren’t as productive as they could be.” 

 But “people are the solution, not the problem,” Shanahan added, according to a DoD account. “From a management standpoint, the easiest thing to do is redraw the lines and boxes on an org chart, but it is actually the hardest thing to implement.”

The plan’s hint of cuts as high as 25 percent to both the federal workforce and contractors is being monitored by the Professional Services Council, which represents 400 contracting firms.

“The Fourth Estate has gotten quite large, in part by design, in part due to inattention,” Alan Chvotkin, counsel and executive vice president at PSC, told Government Executive on Friday. His group has “no concerns with looking at the roles and responsibilities to see if there is work no longer necessary or that can be done through technology and not contractors.”

But the council “wants to make sure the reductions in employees and contractors is not done arbitrarily, without some analysis.”

Resources matter, Chvotkin stressed. For example, the Defense Finance and Accounting Service pays out $1 billion a day to contractors. If 25 percent of staff are to be cut, “We want to make sure contractors who do the work get paid for their work,” along with federal employees, he said.

Same for DISA’s management of defense cyber networks, which relies on a lot of contractors, he said. “If they just change the reporting structure, it’s no big deal. But if there’s a reduced workforce, it will have impact.”

The contractors don’t deny that efficiencies can be achieved through organizational changes, Chvotkin said, crediting Thornberry with putting his draft bills out for early comment. But any changes implemented over time should be considered with a view of whether “current and future missions can be fully executed.”

A more scathing review of Thornberry’s plans came from Gordon Adams, the longtime defense specialist now at the Stimson Center. “Thornberry is basically weighing in on the side of the services in this decades-old effort to claw back funding and authority from the secretary and defensewide agencies,” Adams wrote in an essay in Defense One, Government Executive's sister publication. “As a diversion, the services will always argue that the savings are over there, on the other side, in those pesky cross-defense management functions.”

The two Pentagon management alumni who testified at Thornberry’s hearing both welcomed the reform effort but warned of challenges in implementation.

Reforming the Fourth Estate is “like a balloon. When you squeeze on one side, it just reorgs and shows up somewhere else,” said Preston Dunlap, who led a similar strategic choices and management review in 2013 for then-Defense Secretary Chuck Hagel.

“Each of the current 27 agencies and activities was initially created to achieve greater effectiveness for missions spanning multiple military departments,” he testified. “These missions vary widely from groceries to geospatial analysis, from cutting edge-research to contract auditing, from educating children to engineering…The majority conduct a variety of valuable direct missions for the Department of Defense.”

The Defense Logistics Agency and the DFAS, added Peter Levine, a senior research fellow at the Institute for Defense Analyses, “the two agencies that get the most complaints because of their size—are among the most efficient entities in the department.”

Levine stressed the need for top-level endorsement of the reforms, saying he had “no doubt that the mid-level military and civilian officials who make up these teams are incredibly hard-working public servants.” But “they cannot be expected to sign off on disruptive changes that threaten to restructure organizations, unsettle existing relationships and reduce resources without strong and consistent encouragement and engagement from the department’s leadership.”