Businessmen find ways to cut Pentagon costs by $92 billion
Washington — President Reagan's promise to rearm America is now well established in fact: more ships, more tanks, more planes, more missiles, and more to come. Now, the emphasis in Washington has shifted to how well the Pentagon is doing in stocking and managing its bristling new arsenal.
The administration claims marked progress in managing defense costs more efficiently. But in a detailed report Thursday, the President's Private Sector Survey on Cost Control identified $92 billion in savings that could be gained if Defense Secretary Caspar W. Weinberger and the armed services followed its recommendations.
''If you add together the totals from the four defense department reports released today and unduplicated defense issues from previously released task-force reports, you get a cumulative total over three years of $104.5 billion in potential savings and revenue enhancements from the Department of Defense,'' said survey chairman J. Peter Grace.
Even for a department that is aptly described in the report as larger ''than any other free-world organization,'' this is a sizable sum: nearly half of the Pentagon's 1983 budget authority of $239 billion. And while this Reagan-named group of business leaders says it fully agrees that the United States needs a strong national defense, it points up sharply that both the administration and Congress have much to do in shaping a more efficient defense organization.
This doesn't come as revelation to those who track such things closely in Washington, especially in light of the unprecedented peacetime acquisition of new weapons that has occurred since Mr. Reagan's election.
''You've got a real procurement squeeze coming up,'' House Armed Services Committee member Les Aspin (D) of Wisconsin told Pentagon reporters over breakfast just before the private-sector report was released. Noting the many new nuclear weapons systems alone, Congressman Aspin warned, ''You're going to have trouble funding all of them.''
In the Senate, where the Armed Services Committee just approved a defense authorization bill for 1984 of just under $200 billion, Republican William Cohen of Maine is urging the Pentagon to engage in more competitive bidding before buying new weapons.
''Experts estimate that from 15 to 50 percent can be saved by increasing the number of bidders for a contract,'' says Senator Cohen. ''But equally important is the fact that increased competition usually produces a better quality product and ensures that government contracts are awarded on the basis of merit rather than favoritism.''
Defense management savings will not come easy, the private-sector task force acknowledges: ''Implementation requires dealing with knotty issues like tradition, interservice rivalries, institutional resistance, and congressional interposition.'' Among its recommendations:
Defense Department. Eliminate overlap between the office of secretary of defense and the armed services in weapons procurement, simplify existing regulations, and encourage greater use of common parts. Eliminate unnecessary military bases, which cost $2 billion to $5 billion. Change the military retirement system by increasing time in service before receiving full benefits and adding an earned income offset (like social security). Administer military health care more effectively. Total three-year savings: $44.7 billion.
Air Force. Savings of more than $5 billion could be realized by increasing weapons procurement competition with more multiyear contracts and hiring more than one contractor for a project (dual-sourcing). When retirement benefits, civilian hiring, and other reforms are added, the Air Force could save $27.6 billion over three years.
Army. Stabilizing new weapons programs by reducing design changes, shifting to a two-year budget cycle for major weapons systems, better management of war reserve stocks, changing the Army's ''up or out'' policy to retain more expe-rienced soldiers who might not be eligible for promotion, and other reforms could yield $12.5 billion in three-year savings.
Navy. Multiyear procurement and dual-sourcing to reduce weapons costs, improving supply and storage operations, modernizing inventory control, and extending by one year the tours of duty of ''high-potential officers and enlisted personnel'' could save the Navy more than $7 billion over three years.
Some 40 percent of these savings have to do with weapons procurement, an area Pentagon officials say they are striving to improve. Representative Aspin, who chairs the House Armed Services subcommittee on personnel and compensation, will hold hearings later this month on possible military retirement reforms.