At the cash-strapped Defense Department, the bean counters now have the upper hand.
When then U.S. Defense Secretary Robert Gates began a series of meetings in 2009 on overhauling the Pentagon's budget, he made sure that Michèle Flournoy, his powerful policy chief, was a key player in the negotiations. After all, strategy is supposed to drive financial choices in the Pentagon. And the office of the undersecretary of defense for policy has long been seen as the Pentagon's strategy house.
Four years later, current Defense Secretary Chuck Hagel has called for a strategic review of the Pentagon's budget. But Flournoy's successor, James Miller, isn't in control.
Instead, Christine Fox, director of cost assessment and program evaluation at the Pentagon -- who's known for her budgetary and programmatic acumen -- is in charge of this so-called "Strategic Choices and Management Review." Within the Defense Department, that has been taken as a signal that the set of financial options for the Pentagon has been driven by resources, not policy. In cash-strapped 2013, the budget appears to determine the strategy, and not vice versa. The Pentagon's spending is in the ditch, the thinking seems to be, and the strategic review process is about how to get the Pentagon out of it.
That may make some sense as the Defense Department is forced to trim its budget by $487 billion over the next 10 years under the Budget Control Act, plus do another 10-year $500 billion cut under sequestration -- if Congress doesn't help the Pentagon by paring those cuts back.
But it has left some observers of the budget process concerned.
"My view is that policy has taken a back seat," said one well-placed observer. "It is also my personal view that the back-seat role they're in is maybe not the wrong role for them to be in right now."
The sense that the Pentagon's policy shop hasn't played as much a role in the strategic review feeds the perception that has plagued the review: that it has been an exclusive process whose objectives are unclear and that the players who've been sitting at the table operate with unknown biases and disproportionate power. Loren Thompson, a consultant to a number of large defense firms, thinks the Pentagon is just in a different time and place.
"This seems to have been a budget-driven process, probably because threats are receding, but the demands of deficit reduction are pressing hard on the department," Thompson said.
The fact that Miller, the undersecretary for policy, recently floated the notion of major cuts to his staff doesn't exactly feed the sense that the policy team is ascendant.
But some officials think that the policy shop had its say already, devising the rebalance-to-Asia strategy that has figured so strongly in Pentagon strategy over the last year. Others say they think Miller may not have enough sway with the White House, or even with Hagel, and that helped sideline the policy shop's contributions. Still others claim this current process isn't all that important, even if it does amount to a precursor to next year's congressionally mandated Quadrennial Defense Review.
But a senior defense official said that policy is playing a key role in the strategic review. "Miller and his team have been instrumental in working on the hard choices that may come down the pike," the official said.
Indeed, representatives from the policy shop have attended the meetings and even co-chaired some of the subgroup meetings, and Miller and other civilian military leaders reportedly attend at least the high-level meetings. "Every undersecretary, service secretary, service chief, every combatant commander," the official said, referring to the wide representation across the building in the meetings.
Yet the tension inside the building over the Strategic Choices and Management Review (SCMR) is palpable. Each of the services is attempting to protect its "rice bowl," fighting for its programs and resources, but they say privately that they're doing so in the dark. They say they don't have a sense of what the Pentagon's overarching strategy will be.
And the process has moved forward without them, they also believe. More than a dozen "working groups" were formed on a variety of issues. The results of each group's efforts were then fed into a central office headed by Fox. There, top-level staffers assembled a final product. That contributed to a perception that once the program analysis had been completed, it was left to a small, powerful group of individuals to frame the product for Hagel. One military officer familiar with the process, but outside Fox's office, described it as an undertaking that was far from transparent.
"It's a mysterious process," the military officer said. "The real decisions are being made in a smoke-filled room." That officer said that if Miller and his people have been sidelined, it means budget thinking has trumped strategic thinking. "It is like letting the accountants write the business plan," he said. "They're not bad people, but they do not have a strategic perspective on anything but the bottom line. Our national security should be measured in more than just dollar signs."
But, he added, both the bean counters and the strategy folks need the practical perspective of each armed service. Without the heavy input of the Army, Navy, Air Force, and Marine Corps, the military can become overly focused on an issue such as China, say, and potentially ignore the need for capabilities in places like Somalia, Mali, or Syria, the officer said.
"Unrealistic understanding of the true cost-effectiveness/practicality of proposed courses of action can lead you to really bad strategic and budgetary conclusions," he added.
The SCMR, or "SCAMMER" as it's not so lovingly come to be called in the Pentagon, was first briefed to Hagel on June 6 and 7, with Fox, Deputy Defense Secretary Ash Carter, and others. The SCMR is supposed to be a comprehensive, top-to-bottom review of the Pentagon budget, looking at operations, strategy, compensation for military and Defense Department civilians, health-care costs, DOD education, and other costly programs. The Army is seen as the lowest-hanging budgetary fruit because of the wind-down of the land wars in the Middle East and Central Asia. The service will likely see the biggest cuts in what one defense official has characterized as the "biggest and most emotional and bureaucratically contentious" area in which to find cuts.
Fox was expected to leave the Pentagon at the end of June. Hagel spent nearly half of last week reviewing the strategic review, asking for tweaks and looking at the options he confronts. Hagel tried to explain that the SCMR would not be the genesis for a future budget strategy. "This is not a plan," Hagel told reporters in the Pentagon on Wednesday, June 26. "It was exactly what the title implies: Strategic Choices and Management Review. Review all the components of our budget, our responsibilities. Prioritize those based on these different scenarios so that -- so that we could be as prepared as we could be to make sure that the president is assured that he's got the options and -- and this country is capable to carry out the requirements to assure our national security."
Hagel also sought to manage expectations from Capitol Hill, academia, industry, and the media that there would not be a dramatic unveiling of the results of the review. In fact, he said, there may not be any such endpoint. "There will be no rollout of any grand plan on this." And for his part, Hagel said it has been an inclusive process, including the chairman of the Joint Chiefs of Staff, Gen. Martin Dempsey, as well as "all of our uniformed and civilian leadership was involved, top to bottom, which I wanted that. We looked at everything."
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