Navy Secretary Urges Pentagon to Cut Overheads

U.S. Navy Secretary Ray Mabus has urged budget cutters to target what he called duplicative and ineffective agencies such as the Pentagon's payment services arm instead of cutting needed weapons programs.

"If you want to look at real money, 20 percent of the Pentagon's budget - one dollar out of every five - is spent on ... the Office of the Secretary of Defense and defense agencies. Pure overhead," Mabus said during a speech at the conservative American Enterprise Institute think tank.

Mabus said the Navy had cut spending on service contracts, which accounted for about $40 billion out of the Navy's overall budget of $160 billion, by 1 percent, saving about $4 billion. Further savings were still possible, he said.

The U.S. Defense Department is girding for large budget cuts that are due to resume in fiscal 2016 unless Congress revises existing law. Mabus said he would do all he could to protect shipbuilding accounts if the cuts went back into effect.

Mabus said the inability of Defense Finance and Accounting Services, the payment services agency, to account for data that it had received from the Navy could impede the Navy's ability to conduct a clean audit this year.

Nine of 10 of the agency's internal controls had been found to be ineffective, Mabus said, adding, "Do we really need that?"

Mabus said he had learned while serving as governor of Mississippi that consolidating agencies often made sense in theory but not always in practice because it created larger, more bureaucratic organizations.

For instance, he said the Defense Logistics Agency was set up to purchase materials for the entire military and benefit from larger economies of scale, but the Air Force and the Navy used different types of fuel, which meant that goal could not be achieved anyway.

"I think you ought to take a look at every one of these ... There's a lot of duplication going on," he said.

He said the individual military services could also likely cut overhead costs further.

Mabus also criticized the Pentagon's current approach to testing weapons, noting that hundreds of millions of dollars were spent on tests that were sometimes not needed.

For instance, he said, the Pentagon's office of test and evaluation had criticized the Navy's littoral combat ships for not being able to survive in a conflict, but the plan had never been to send those smaller ships out by themselves, he said.