Carter Explains HQ Cuts

Deputy Defense Secretary Ashton Carter today issued further guidance on implementing Defense Secretary Chuck Hagel's call for a 20 percent cut in management headquarters spending throughout the Defense Department.

"The cuts, which will take place regardless of the budget levels approved by Congress, are designed to streamline DOD's management through efficiencies and elimination of lower-priority activities," Carter writes in a memo that "defines the nature of these important reductions more specifically."

The headquarters cuts will apply to all higher headquarters staffs including Office of the Secretary of Defense principal staff assistants (PSAs) and their associated defense agency staffs, Joint Staff, service secretary staffs, service chief staffs, service four-star major commands and service component commands, lower-level service staffs (down to the appropriate level determined by the service secretaries and chiefs), and combatant command staffs, Carter writes.

Intelligence staffs will also be affected (primarily military intelligence program-funded intelligence centers and -- with the concurrence of the White House's intelligence director -- national intelligence program-funded centers), the memo adds.

"Service secretaries and chiefs will decide the allocation of cuts among various organizations within their headquarters staffs," Carter writes, noting the chairman of the Joint Chiefs will make the same allocation for the Joint Staff. Each PSA and defense agency should achieve a 20 percent reduction. "If necessary, I will consider reallocations during program review," Carter adds.

The 20 percent cut applies to the total headquarters budgets. Total headquarters budgets include government civilian personnel who work at headquarters and associated costs including contract services, facilities, information technology, and others that support headquarters functions. Budgets are those specified in the future years defense program supporting the president's budget for fiscal year 2014, extended to FY-19 assuming growth for inflation, the memo states.

The 20 percent cut applies to budget dollars, Carter writes. "However, organizations will strive for a goal of 20 percent reductions in authorized government civilian staff at their headquarters," he adds. "Similarly, while military personnel are not part of headquarters budgets, organizations will strive for a goal of 20 percent reductions in military personnel billets on headquarters staffs." Subordinate headquarters should not grow as a result of reductions in higher headquarters, the memo states. "I will be reviewing proposals to ensure that these various goals are met," Carter adds.

The memo acknowledges that the FY-14 budget reflects past efficiency decisions, some of which affected headquarters. This 20 percent reduction represents an additional cut, "which I know will be challenging," Carter writes. "However, in this period of additional downward pressure on defense spending, we must continue to reduce our headquarters budgets and staffing. Components are encouraged to suggest changes in policies and workload that would help them accommodate these dollar and staff reductions."

The memo urges senior managers to ensure that cuts are made aggressively and as soon as possible, "both to eliminate uncertainty for our employees and contractors and to maximize savings."

Generally, cuts should be roughly proportional by year -- with about one fifth of the cut in FY-15, another fifth in FY-16, and so on, Carter writes, noting components are free to implement reductions more rapidly. To the extent feasible, some cuts should begin in FY-14 to increase savings and reduce the cuts required in later years, he adds.

Reduction plans should be submitted along with the program objective memorandum submissions, which are due Sept. 23, the memo states.

In a press conference today, Hagel noted the Pentagon's Strategic Choices and Management Review considered potential consolidations of regional combatant commands and defense agency mission cuts, but he did not discuss the details.