Gates Announces Cuts and Reinvestments

The Secretary of Defense Robert Gates in what some are considering an attempt to get ahead of Congress announced that the Pentagon will be voluntarily reducing spending. Some of the money is part of the efficiencies he ordered last year while some of it is new reductions to programs and other parts of the military budget.

The goal is not to only cut the total defense budget as part of an attempt to reduce the deficit but also to free up money for higher priorities.

Much of what Gates’ is claiming as savings are those items related to the reductions from last year. Cuts to the contractor workforce and elimination of some DoD offices and personnel are one part as well as the closing of the Joint Forces Command in southern Virginia.

Other new reductions were the elimination of the Marine’s new amphibious transport the Expeditionary Fighting Vehicle (EFV). This General Dynamics (GD) led program was to replace the LVTP-7 currently used to move Marines from ship-to-shore as well as support operations on land. The EFV would have been faster and more capable as well as having a higher protection level. The program suffered from cost and schedule growth making it an easy target.

The Army also saw the end of the SLAMRAAM air defense program which put a Raytheon (RTN) AMRAAM missile on a HUMVEE teamed with fire control and battle management systems. Lockheed Martin’s (LMT) Non Line of Site- Launch Systems was also canceled. This was a rather unique system of remote missile launchers used to provide fire support for ground troops.

One aspect of his announcement that is sure to cause concern is an increase in TRICARE co-pays for some military members and retirees. The idea is to begin trying to reduce total healthcare spending by the Defense Department. TRICARE is the HMO type program that covers most active duty members, their dependents and retirees. The co-pays have seen little increase since start of the program. At a time though when the Veterans Administration and Defense Department have been criticized for not adequately treating the current Iraq and Afghanistan military the increase may prove politically risky.

Another move to save money that also might raise hackles is a decision to begin reducing the size of the Active duty Army and Marine Corps. This comes after several years of growth due to the large commitment to Iraq and Afghanistan. Personnel costs make up a large portion of the budget and this is the most direct way to reduce them. Of course having less troops means that if there is a need for a major operation over the next several years there will be greater pressure on the smaller force as well as Reserves and National Guard. The reason they were growing the current force was to minimize deployments.

Gates is hoping that his ideas will be considered by the new Congress who are looking to reduce spending. That doesn’t mean all of his proposals will be accepted as Congress has the power to restructure defense spending to reflect their views. They might want to keep some of the programs that Gates doesn’t and cancel other ones.

This move is the start of the FY12 and out budget development and many changes and ideas will be presented over the next several months as the process goes on.

Photo from RDECOM’s flickr photostream.

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One Response to “Gates Announces Cuts and Reinvestments”

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