Guide to Cuts

Spending Smarter, Spending Less:
Opportunities to Reduce Excessive Pentagon Spending

PROJECT ON GOVERNMENT OVERSIGHT
MAY 2019 | DOWNLOAD PDF

At $716 billion, last year’s budget for the Pentagon and related agencies was one of the highest since World War II. Yet, as former Defense Secretary Robert Gates once said, “If the Department of Defense can’t figure out a way to defend the United States on a budget of more than half a trillion dollars a year, then our problems are much bigger than anything that can be cured by a few more ships and planes.”[1]Below is a list of opportunities for savings that could significantly reduce spending by $199 billion without undermining national security or capabilities. All numbers listed represent one-year savings.

1 – Don’t create a Space Force—save $2.6 billion. Creating a new space bureaucracy will undermine effectiveness and increase costs, and is unlikely to significantly add to U.S. capabilities in this domain.[2] The Air Force estimates that creating a new Space Force will increase costs by $13 billion over the next five years. The Congressional Budget Office also estimates the initial costs could be as high as $3 billion.[3]

2 – Eliminate the Overseas Contingency Operations account—save $68.8 billion[4] to $174 billion.[5] There is bipartisan consensus that the overseas contingency operations account has become a slush fund for Pentagon programs that have no connection to emergencies or contingencies.[6] Even the Defense Department has admitted half of that account is being used for “enduring requirements” that should be in the base budget.[7] Over-reliance on this account has undermined effective budget management as well.[8] Eliminating this fund would reduce waste and improve future planning.

3 – Cut service contracting by 15 percent—save $26 billion. Several analyses, including one conducted by the Project On Government Oversight, have found that hiring private contractors to perform work that would otherwise be performed by civilians, or not at all, has increased costs.[9] The cost assessment office for the Pentagon found contractor employees were most costly, sometimes costing two to three times more than a federal employee performing the same work.[10] Curtailing these costs by 15 percent could result in significant savings, since in fiscal year 2018 the Defense Department spent nearly $175 billion on service contracting.[11]

4 – End use-it-or-lose-it contract spending—save $18 billion. In fiscal year 2016, contract obligations for the Defense Department averaged $25 billion per month, except in the last month of the fiscal year when they surpassed $43 billion.[12] Capping the amount the Department could spend in this last month at their average levels would improve budget discipline, strengthen management, and reduce waste.[13]

5 – Freeze operations and maintenance budget levels—save $6 billion.Operations and maintenance spending has often been higher than the Defense Department can responsibly spend. For example, a Government Accountability Office review of the Department’s canceled funds—funds appropriated but allowed to expire because the Department didn’t need them—found that of the $80 billion canceled since fiscal year 2013, approximately $49 billion came from this account.[14] This disconnect may be due in part to a mismatch between operations and maintenance funding levels and meaningful metrics to assess readiness.[15] The Congressional Budget Office estimates if this authority were frozen for five years, and if growth thereafter were limited to the rate of inflation, the Department would save $195 billion over 10 years.[16]

6 – Replace some military personnel with civilian employees—save $200 million. Defense Department data showed that “thousands of members of the military work…jobs that could be performed by civilian employees or contractors at a lower overall cost.”[17] Over 10 years this change could save $14.2 billion as transferring these functions would allow for reductions in military personnel.[18]

7 – Provide $16 billion per year for naval ship construction—save $4.6 billion. Current budgets would increase spending on shipbuilding to an average of $29 billion per year—an 80 percent increase from the previous 30-year average of $16 billion per year. The Congressional Budget Office has found that “the Navy would still have a powerful fleet in 2028 and beyond” with reduced funding for ship construction.[19] Fewer ships would also reduce the levels of manning necessary to operate the ships and the accompanying costs.[20] Over 10 years, keeping the budget at $16 billion per year could save nearly $50 billion.[21]

8 – Retain a nuclear triad with 8 submarines, 150 intercontinental ballistic missiles (ICBMs), and 1,000 warheads—save $100 million. The United States has “12 deployed (14 total) Ohio class SSBNs [ballistic missile submarines] that together carry up to 1,090 warheads on 240 missiles; 400 deployed (454 total) Minuteman III ICBMs, each carrying a single warhead; and 60 deployed (66 total) B-52H and B-2A bombers, each of which counts as a single warhead.”[22]Reductions of these nuclear weapons could strengthen nonproliferation while maintaining enough weapons to be an effective deterrent. Over 10 years the Department would save nearly $9 billion.[23]

9 – Defer or cancel development of the B-21 Bomber—save $3 billion. The Air Force currently operates a fleet of 157 long-range bombers, which will be able to keep flying until at least 2040. The Air Force estimates the new B-21 would begin operating about five to ten years from now.[24] This manned bomber would be entirely irrelevant in the case of an actual nuclear war. The enemy’s ballistic missile submarine (SSBN)-launched and land-based ballistic missiles would likely reach their targets before Air Force bombers had a chance to take off. F-16s and F-35s can carry nuclear bombs should the need for manned aircraft in that role arise. This option would save $266 billion over 30 years.[25]

10 – Reduce the size of the bomber force by retiring the B-1B—save $1.8 billion. Other aircraft in the Air Force’s inventory, including the 76 B-52Hs and 20 B-2As, could handle missions now covered by this force. Retiring the B-1B would save $16.5 billion over 10 years.[26]

11 – Cancel the Long-Range Standoff Weapon—save $1.4 billion. The Long-Range Standoff Weapon does not add to the United States’ already robust strategic deterrent. Rather, it performs a redundant mission that can be accomplished with the standoff capability of ICBMs or submarine-launched ballistic missiles (SLBMs), or by the advanced extended-range conventional cruise missile. Canceling this weapon would save $13.3 billion over 10 years.[27]

12 – Replace future F-35s with F-16s and F-18s—save $2.4 billion. The F-35 program has already fallen nearly a decade behind schedule with a price tag that has more than doubled. It also continues to be riddled with problems that undermine its readiness for combat.[28] Moreover, the services are already looking beyond the F-35 to the next program, while F-16s and F-18s continue to meet current operational needs. The Defense Department estimates it would cost $253 billion to complete the program.[29]

13 – Reduce U.S. presence in Afghanistan by half—save $23.15 billion. Reducing U.S. presence in Afghanistan by half would be slightly less aggressive than President Trump’s call for the United States to withdraw 7,000 troops.[30] The calculated savings are based on last year’s budget submission, which requested $46.3 billion for missions in Afghanistan, based on a 11,958 troop end strength.[31]

14 – Retire the F-22—save $2.9 billion.[32] The F-22 is expensive to maintain and designed for air-to-air fighting against a sophisticated enemy like China or Russia. The United States is unlikely, however, to ever engage in such an armed conflict. As has been demonstrated by recent events, conflict is more likely to be in the cyber sphere, or to lead to the use of nuclear weapons.[33]

15 – Cancel the Ground-Based Midcourse Defense System (GMD)—save $2.5 billion.[34] The current fleet of ICBMs will be operational until 2030 due to a $7 billion life extension program that is underway, and the proposed replacement has significant shortfalls.[35] “As it exists today, the [GDM] system would offer little to no protection in any realistic scenario,” the Union of Concerned Scientists has pointed out. “If the GMD continues to play a role in US security strategy, it needs, at a minimum, clear goals, rigorous testing, and effective oversight and accountability.”[36] Given uncertainty about future force requirements and deterrence needs, development of the ICBM follow-on is premature.

16 – Cancel development and production of a new missile in the Ground-Based Strategic Deterrent Program—save $400 million.[37] Experts have proposed updating the current warheads (the W76 and the W88) using life extension programs instead of designing new missiles, and focusing funding on cost-effective management of life-extension programs.[38] A 2016 cost assessment from the Pentagon places the final price tag for the new missile anywhere between $85 billion and $150 billion, which is at least $20 billion more than initial estimates from the Air Force.[39]

17 – Cancel the Ford-class carrier program—save $1 billion.[40] Knowing the role carriers play in projecting power, U.S. adversaries have been developing and deploying weapons to keep them at bay. Ford-class carriers are vulnerable targets to adversaries’ anti-ship missiles, placing 5,000 U.S. sailors in enemy crosshairs.[41]Testing to date has revealed critical deficiencies for flight operations, which would affect the Ford’s ability to generate sorties, make the ship more vulnerable to attack, or create limitations during routine operations.[42] Shifting to a fleet of smaller ships loaded with long-range missiles would be more effective.[43] The Congressional Budget Office estimates this would save taxpayers more than $18 billion over the coming decade.

18 – Authorize another Base Realignment and Closure process—save $2 billion per year.[44]Multiple administrations have requested that Congress authorize a Base Realignment and Closure (BRAC) round to improve capabilities and get rid of excess capacity.[45] The previous four rounds continue to create over $13 billion in annual savings and another round is likely to save another $2 billion per year. Congress’s refusal to authorize another round has resulted in funds not being allocated to more productive programs and is a waste of taxpayer dollars. Any BRAC round should also include adequate funding for the Office of Economic Adjustment to help communities transition effectively and productively.

19 – Authorize a Base Realignment and Closure process for the nuclear labs—save $1 billion per year. The combined annual operating budget of nuclear weapons complex facilities is about $13 billion.[46] Consolidating the dangerous nuclear materials these labs use for research and weapons production would reduce costs while significantly increasing security. Removing dangerous nuclear materials from just one of the Energy Department’s national laboratories—Lawrence Livermore—saved taxpayers approximately $40 million per year.[47] The removal of nuclear materials allowing for the closure of even a single lab would save at least $1 billion annually.

20 – Implement open Defense Department Inspector General recommendations—save $2.3 billion. The Defense Department Inspector General conducts numerous audits to identify waste, fraud, and abuse. There were 1,558 open recommendations as of March 31, 2018, that the Defense Department has yet to adopt to correct the identified problems. The Department’s watchdog’s estimate is based on 25 high-priority open recommendations the office believes “have the potential to result in significant improvements to DoD operations.”[48]

21 – Reduce administrative waste, including excessive contractor staffing—save $25 billion.[49]Excessive overhead, overreliance on service contractors, and other administrative waste reduces the effectiveness and efficiency of the Defense Department. The Defense Business Board estimated the Department would save $125 billion over five years reducing this waste.

22 – Reduce active troop presence in Europe to 40,000—save $1.5 billion. U.S. posture in Europe is based on outmoded Cold War assumptions. As of September 2018 there were approximately 64,000 active duty U.S. troops serving in Europe.[50]The average cost of each active duty service member was $107,106 in fiscal year 2018.[51] Reducing troop levels to 40,000 would save taxpayers billions in reduced personnel and operations and maintenance spending.

23 – Reduce active troop presence in the India-Pacific Command Region to 66,000—save $2.36 billion. Sustainably balancing U.S. forces to effectively address modern threats should include making appropriate alterations to U.S. posture around the globe. There are approximately 88,000 active duty personnel serving in the India-Pacific Command Region.[52] Reducing that level by 25 percent to 66,000 would save billions.


The Project On Government Oversight thanks Bill Hartung, director of the Arms and Security Project at the Center for International Policy, for his contributions.

[1] Samantha L. Quigley, “Defense Department Must End Business as Usual, Gates Says,” American Forces Press Service, July 16, 2009. https://archive.defense.gov/news/newsarticle.aspx?id=55159

[2] Dan Grazier, “Space Force: A Historical Perspective,” Project On Government Oversight, October 16, 2018. https://www.pogo.org/analysis/2018/10/space-force-a-historical-perspective/

[3] Congressional Budget Office, The Personnel Requirements and Costs of New Military Space Organizations, May 2019, p. 2. https://www.cbo.gov/system/files/2019-05/55178-SpaceForce.pdf

[4] Brendan W. McGarry and Susan B. Epstein, Overseas Contingency Operations Funding: Background and Status, Congressional Research Service, Summary, January 15, 2019. https://fas.org/sgp/crs/natsec/R44519.pdf

[5] Tony Bertuca, “Pentagon planning a mammoth FY-20 budget to avoid spending cap,” Inside Defense, February 7, 2019. https://insidedefense.com/share/202064

[6] Mick Mulvaney, “Mulvaney, Van Hollen, Lee, Sanford Amendment Helps Prevent Abuse of OCO Slush Fund,” May 19, 2016. https://votesmart.org/public-statement/1100038/mulvaney-van-hollen-lee-sanford-amendment-helps-prevent-abuse-of-oco-slush-fund#.XNReYaQpCUk

[7] Mandy Smithberger, “Pentagon Admits Half of War Spending Account is Slush,” Project On Government Oversight, October 3, 2016. https://www.pogo.org/analysis/2016/10/pentagon-admits-half-of-war-spending-account-is-slush/; Tony Bertuca, “Pentagon will need to fund ‘enduring requirements,’ now in OCO account, once combat ends,” Inside Defense, September 30, 2016. https://insidedefense.com/share/181524

[8] David Thornton, “Using OCO funds to bypass budget caps ‘departure from historical norms,’ CBO says,” Federal News Network, March 1, 2019. https://federalnewsnetwork.com/budget/2019/03/using-oco-funds-to-bypass-budget-caps-departure-from-historical-norms-cbo-says/

[9] Project On Government Oversight, Bad Business: Billions of Taxpayer Dollars Wasted on Hiring Contractors, September 13, 2011. https://www.pogo.org/report/2011/09/bad-business-billions-of-taxpayer-dollars-wasted-on-hiring-contractors/; Statement by Jacques S. Gansler, Ph.D., Before the Commission on Wartime Contracting in Iraq and Afghanistan, “Implementing Improvements to Defense Wartime Contracting,” April 25, 2011, pp. 12-13. http://www.wmiimecontracting.gov/docs/hearing201 l-04-25 _testimony-Gansler.pdf

[10] Cost Assessment and Program Evaluation, Office of the Secretary of Defense, Comparing the Cost of Civilians and Contractors: Performance of Comparable DoD Functions, April 2017. https://admin.govexec.com/media/gbc/docs/pdfs_edit/dodcontractorcivilianpart1.pdf and https://admin.govexec.com/media/gbc/docs/pdfs_edit/dodcontractorcivilianpart2.pdf

[11] Federal Procurement Data System, “Total Actions by PSC Report.” https://www.fpds.gov

[12] Moshe Schwartz, “End-Year DOD Contract Spending,” Congressional Research Service, November 17, 2017, p. 1. https://fas.org/sgp/crs/natsec/IF10365.pdf

[13] Roxana Tiron and Tony Capaccio, “Pentagon Whiffed on Spending $28 Billion as Time Ran Out,”Bloomberg Government, January 8, 2019. https://federalnewsnetwork.com/fiscal-2019-federal-contracting-playbook/2019/01/pentagon-whiffed-on-spending-28-billion-as-time-ran-out/

[14] Tony Bertuca, “DOD draws fire from Sanders for returning $80 billion in funding between FY-13 and FY-18,” Inside Defense, March 6, 2019. https://insidedefense.com/daily-news/dod-draws-fire-sanders-returning-80b-funding

[15] Todd Harrison, “Rethinking Readiness,” Center for Strategic and Budgetary Assessments, August 29, 2014. https://csbaonline.org/research/publications/rethinking-readiness

[16] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 125. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[17] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 130. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[18] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 130. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[19] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 130. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[20] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 137. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[21] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 136. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[22] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 138. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[23] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 138. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[24] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 143. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[25] Congressional Budget Office, Approaches for Managing the Costs of U.S. Nuclear Forces, 2017 to 2046, October 2017, p. 2. https://www.cbo.gov/system/files?file=115th-congress-2017-2018/reports/53211-nuclearforces.pdf

[26] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 148. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[27] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 141. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[28] Government Accountability Office, F-35 Aircraft Sustainment: DOD Needs to Address Substantial Supply Chain Challenges, April 25, 2019, p. 12. https://www.gao.gov/assets/700/698693.pdf

[29] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 132. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[30] Thomas Gibbons-Neff and Mujib Mashal, “U.S. to Withdraw About 7,000 Troops from Afghanistan, Officials Say,” New York Times, December 20, 2018. https://www.nytimes.com/2018/12/20/us/politics/afghanistan-troop-withdrawal.html

[31] Office of the Under Secretary of Defense (Comptroller) Chief Financial Officer, Defense Budget Overview, February 12, 2018, pp. 4-1, 4-2. https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2019/FY2019_Budget_Request_Overview_Book.pdf

[32] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 150. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[33] Sintia Radu, “China, Russia Biggest Cyber Offenders,” US News, February 1, 2019.https://www.usnews.com/news/best-countries/articles/2019-02-01/china-and-russia-biggest-cyber-offenders-since-2006-report-shows; Kate Fazinni, “China and Russia could disrupt US energy infrastructure, intelligence report warns on heels of Huawei indictments,” CNBC, January 29, 2019. https://www.cnbc.com/2019/01/29/china-russia-could-disrupt-us-infrastructure-with-cyber-attacks-odni.html

[34] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 150. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[35] Jen Judson, “Boeing wins $6.6B deal to support missile defense system, build more interceptors,” Defense News, February 1, 2018. https://www.defensenews.com/land/2018/02/01/boeing-wins-66-billion-deal-to-support-missile-defense-system-build-more-interceptors/

[36] Union of Concerned Scientists, “US Missile Defense: Unproven and unaccountable.” https://www.ucsusa.org/nuclear-weapons/us-missile-defense

[37] Congressional Budget Office, Options for Reducing the Deficit: 2019 to 2028, December 2018, p. 157. https://www.cbo.gov/system/files?file=2018-12/54667-budgetoptions.pdf

[38] Aaron Mehta, “4 alternatives to the Pentagon’s new ICBM modernization plan,” Defense News, September 22, 2017. https://www.defensenews.com/space/2017/09/22/4-alternatives-to-the-pentagons-new-icbm-modernization-plan/

[39] Kingston Rief, “Congress Increases ICBM Funding,” Arms Control Today, December 1, 2018. https://www.armscontrol.org/act/2018-12/news-briefs/congress-increases-icbm-funding

[40] Congressional Budget Office, “Stop Building Ford Class Aircraft Carriers,” Options for Reducing the Deficit 2019 to 2028, December 13, 2018. https://www.cbo.gov/budget-options/2018/54758

[41] Dan Grazier and Pierre Sprey, “How Not to Build a Ship: The USS Ford,” Project On Government Oversight, May 30, 2017. https://www.pogo.org/investigation/2017/05/how-not-to-build-ship-uss-ford/

[42] Director of Operational Test and Evaluation, “CVN 78 Gerald R. Ford-Class Nuclear Aircraft Carrier,” FY 17 Annual Testing Report, p. 167. http://www.dote.osd.mil/pub/reports/FY2017/pdf/navy/2017cvn78.pdf

[43] Kyle Mizokami, “Should the U.S. Navy Turn Merchant Ships into Floating Missile Magazines?”Popular Mechanics, January 10, 2019. https://www.popularmechanics.com/military/navy-ships/a25845858/usni-merchant-ships-navy-missile-magazines/

[44] Department of Defense, Department of Defense Infrastructure Capacity, March 2016, p. 18. https://defensecommunities.org/wp-content/uploads/2015/01/2016-4-Interim-Capacity-Report-for-Printing.pdf

[45] Dan Lamothe, “The Trump administration wants a new round of military base closures. Easier said than done.” Washington Post, May 23, 2017. https://www.washingtonpost.com/news/checkpoint/wp/2017/05/23/the-trump-administration-wants-a-new-round-of-military-base-closures-easier-said-than-done/?utm_term=.2147d0fd9851

[46] In fiscal year 2017, Los Alamos National Laboratory’s budget was $2.55 billion, Lawrence Livermore National Laboratory’s budget was $1.92 billion, Sandia National Laboratories’ budget was $3.2 billion, the Kansas City National Security Campus was $533 million, and the Savannah River Site’s budget was $1.7 billion; in fiscal year 2018 the Nevada National Security Site’s budget was $447 million; the National Nuclear Security Administration requested $825 million for Pantex for fiscal year 2019, and $1.78 billion for Y-12 in fiscal year 2019. Amy F. Woolf and James D. Werner,The U.S. Nuclear Weapons Complex: Overview of Department of Energy Sites, Congressional Research Service, September 6, 2018, pp. 13-15, 17, 19-20. https://fas.org/sgp/crs/nuke/R45306.pdf

[47] National Nuclear Security Administration, “NNSA completes removal of high security special nuclear material from the Laboratory,” September 21, 2012. https://www.llnl.gov/news/nnsa-completes-removal-high-security-special-nuclear-material-laboratory

[48] Department of Defense Office of Inspector General, “Compendium of Open Office of Inspector General Recommendations to the Department of Defense,” August 1, 2018. http://www.dodig.mil/In-the-Spotlight/Article/1590190/compendium-of-open-office-of-inspector-general-recommendations-to-the-departmen/

[49] Defense Business Board, Transforming Department of Defense’s Core Business Processes for Revolutionary Change, February 9, 2015, pp. 2, 23. https://apps.dtic.mil/dtic/tr/fulltext/u2/a618526.pdf

[50] Defense Manpower Data Center, “Military and Civilian Personnel by Service/Agency by State/Country,” September 2018. https://www.dmdc.osd.mil/appj/dwp/dwp_reports.jsp

[51] Katherine Blakeley, “Military Personnel,” Center for Strategic and Budgetary Assessments, August 15, 2017. https://csbaonline.org/reports/military-personnel

[52] Defense Manpower Data Center, “Military and Civilian Personnel by Service/Agency by State/Country,” September 2018. https://www.dmdc.osd.mil/appj/dwp/dwp_reports.jsp