Pentagon reform is finally coming

Greg Nash

The Department of Defense, the single largest employer in the United States, is the premier fighting force in the world. However, its business operations have never received a passing grade. Fortunately, that is starting to change with the appointment of Lisa Hershman as acting chief management officer at the Pentagon. Congress created this powerful position last year to make the business practices of the department more efficient, transparent, and cost effective. It is the third highest ranked Pentagon office and is charged with identifying opportunities to save money on contracts, eliminate redundant programs, and cut unnecessary costs. Its mission is to streamline the department and bring a business mindset to the interminable bureaucracy of defense procedures.

That is no easy job to say the least. While the American military is the best trained and most effective fighting force in the world, endless Pentagon bureaucracy, especially with procurement, is a voracious beast that devours resources and imposes practices that delay the completion of upgraded weapons systems while sending prices to the stratosphere. The agency has the largest budget of any organization in the world, coming in at nearly $700 billion in 2018. Its budget and business practices are notoriously arcane. Much of the budget goes to wasteful line items.

The Army has admitted that it failed to keep track of more than $1 billion in weapons in Iraq. In Afghanistan, the department paid $28 million more on camouflaged uniforms than was necessary. The kicker is the extra cash paid for a costly “forest” shade of green in a country where forest covers just 2 percent of territory. The waste is so prevalent that the Defense Business Board, an agency task force, found a potential $125 billion in savings over five years with no reduction in personnel in 2015.

{mosads}It will take a sharp mind and years of experience to steer the Pentagon through the treacherous waters of Congress, contractors, bureaucrats and emerge with a streamlined agency. That is why President Trump made a great decision in appointing Hershman, who served as deputy chief management officer at the department until December, when he asked her to step in as acting chief management officer. As one of only three women in the Pentagon at the official rank of undersecretary or above, she brings many years of successful service in the private sector.

Before joining the department, Hershman served as chief executive officer of Hammer and Company, succeeding Michael Hammer, author of famed business bestseller, “Reengineering the Corporation.” Hammer and Hershman also wrote what was to be his final book, “Faster Cheaper Better.” In addition to consulting and writing, Hershman worked as a senior executive at several other corporations, including leading the operational excellence activities of global company Avnet. Observers have long been impressed by her steel trap mind, executive talents, and her amazing ability to get things done. She knows how to put together effective teams that take action to push projects to completion.

Hershman has the institutional bona fides, business experience, and reformer attitude necessary to transform one of the largest bureaucracies in the world. She has spent her career focusing on how to overhaul organizations and make them effective. In her first year as deputy and acting chief management officer, her team found the department an impressive $4.4 billion in savings in the fiscal 2018 and has already identified an additional $1.7 billion in the first months of fiscal 2019.

The members of our armed forces would be well served if President Trump decides to make her appointment permanent. Success in the chief management officer mission will ensure that the American military remains the best in the world. For years, experts have warned about our aging defense equipment and the shortage of 21st century technology in our armed forces. Redirecting cash from administrative red tape and unnecessary programs to more effective areas will strengthen the ability of our armed forces to protect our nation and strike when needed.

Taxpayers will also reap benefits. The Pentagon budget has risen by billions of dollars under President Trump. But it is not enough to spend more. The money must be spent smarter. The Pentagon has needed a cleanup crew for some time. Thankfully, the latest appointee to the department is ready to get to work and run it like a solid business.

Steve Forbes is the chairman and editor in chief of Forbes Media.

Tags Budget Business Congress Donald Trump Finance Government Military
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