Services Told to Shift $102 Billion

Secretary of Defense Robert Gates on Friday issued guidance directing the services and defense agencies to come up with $101.9 billion in total savings over the five-year period Fiscal 2012-16. They are to do this by reducing overhead and support costs. Gates said the goal is to redirect these funds into personnel, force structure, and readiness accounts and enable the Pentagon to continue its major modernization and sustainment programs. This guidance comes as the services are preparing their Fiscal 2012 program objective memorandums for submittal on July 30. The Air Force, Army, and Navy each are charged with shaving their respective overhead costs by $28.3 billion over this period (FY12: $2 billion, FY13: $3 billion, FY14: $5.3 billion, FY15: $8 billion, and FY16: $10 billion). Another $17 billion will come from defense-wide overhead reductions. This guidance builds upon Gates’ May 8 speech outlining how overhead reductions are critical for funding modernization. (DOD release and guidelines fact sheet) (See also Deputy Defense Secretary Bill Lynn’s June 4 press briefing transcript)