WASHINGTON — The Pentagon’s hunt for efficiencies found $4.372 billion in savings during fiscal 2018, and has already found nearly $2 billion in savings for FY19, according to new figures revealed Tuesday.
Lisa Hershman, acting chief management officer for the Defense Department, told reporters that the FY18 savings were the result of 114 potential projects identified by the CMO’s office as areas where work could net fiscal savings. While those figures are still being vetted officially by the comptroller’s office, Hershman expressed confidence they would be confirmed.
The Pentagon has been charged by the Office of Management and Budget to find $46 billion in savings between FY19 and FY23; the department had previously tacked on the more specific goals of finding $4 billion in savings in FY18 and $6 billion in FY19.
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In many cases, the money came from small projects able to collectively provide big savings, Hershman said.
“We were purchasing things like batteries and light bulbs that we would buy and we would store. So we looked at: Do we really need to do that, is there something we can move to the open market and not have to worry about inventory levels because things are readily available?”
Ending the storage of those kind of items, along with a large collection of maps, freed up inventory space five times the size of the Pentagon’s central courtyard, which led directly to savings, she said.
Those savings are then handed over to the Office of Cost Assessment and Program Evaluation as well as the comptroller’s office, and then redistributed to the department as part of Defense Secretary Jim Mattis’ drive to increase funds for the Pentagon’s war-fighting mission.
That the department was able to hit its FY18 target meant Hershman’s team was “jumping up and high-fiving,” she said, before adding that she hopes “to exceed” the $6 billion target for FY19, thanks to having hit $1.7 billion in savings through just the first eight weeks of the fiscal year.
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Those early FY19 savings come in part from initiatives started in FY18, such as a look at the defense business systems — IT operations, essentially — that exist within the department. Of the 300 or so systems that exist, Hershman said, a recent review found that 45 are redundant and could be eliminated for $900 million in savings.
Her office is broadly focused on four key areas for FY19: information technology, health care, the supply chain and the “fourth estate,” a term covering the headquarters staff in the department. Helping on that front are the findings of the Pentagon’s first-ever audit, which has laid out some areas to target in the coming year.
The savings were initially the project of Jay Gibson, who came in as the Pentagon’s chief management officer in February 2018. But by September, Gibson had been told he was fired and shortly afterward was told to no longer report to the Pentagon; however, he was not relieved of duty until November, creating an awkward absence for staff in the CMO office.
Asked if she was set to be nominated to officially replace Gibson, Hershman declined to comment other than to say she serves at the pleasure of the president.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.
