The Army will begin a pilot program to identify the true costs of its core functions so the service can better control those costs, the director of the Office of Business Transformation said.
Speaking at an Association of the United States Army breakfast on Wednesday, Lt. Gen. Thomas Spoehr said that the Army cannot currently calculate things such as the cost of readiness, bringing in a new soldier from the recruiting station through basic training, or moving a brigade combat team from one base to another.
Individual offices know their own piece of the cost puzzle, he said, but “if we truly seek optimum efficiency, we must consider our costs holistically. Fortunately, our new enterprise resourcing programing, [General Fund Enterprise Business System], will give us that capability to get a complete picture on our costs.”
GFEBS is one of four new enterprise resourcing programs for the Army, two of which are fielded and two of which are on track in meeting their final milestones, Spoehr said. The ERPs will allow for better cost-aggregation across the Army, though some core functions and their costs will still be easier to define than others.
“We’re going to start pilot programs and pick at the easy things and then get to the hard ones,” he said. “The hardest one truly is readiness because everyone in the Army contributes to readiness ; if you don’t contribute to readiness, we need to ask the question, why do we have you?”
Calculating the cost of functions will allow the Army to make smarter decisions about how it spends its money, Spoehr said. The new ERPs also represent smarter spending, he added – they will replace multiple older systems and help the Army keep its information technology costs down. The Army currently spends $2 billion a year on 700 IT systems, but by switching to the new systems, “by [fiscal year 2019], by retiring outdated legacy systems and folding these capabilities into our new ERPs, we anticipate driving down our annual IT costs by $600 million a year, down to $1.4 billion a year. And we are going shed 180 systems, bringing us down to 520. And we’re working every day to identify other systems we can eliminate.”
Spoehr said his office was also trying to revive the Business Initiative Program to help get the most out of the limited funding the Army receives. He said the Army started out with 27 initiatives and had whittled that down to 15, which receive oversight from as high up as the undersecretary of the Army. One of the 15 still haven’t graduated deals with government-issued travel cards, which – like popular credit cards – generate cash-back rewards points.
“If we could increase the number of people that use the government travel card for their expenses, the Army could get all kinds of money more back as a rebate,” he said. “So we’ve added that as a business initiative. It sounds plebeian, but it’s millions of dollars, and if we can get that back we can plow that back into readiness or something else that needs it. So the business initiative program is being reinvigorated, we’re adding things to it. And really, when you become a business initiative, that means you have the power of the undersecretary of the Army who’s tracking it.”
As for other ways to spend more efficiently, Spoehr said the acquisition reform effort by the Pentagon and Congress could yield savings if officials are willing to take drastic enough steps.
“I hear from the [program managers] that are doing our enterprise resourcing programs, and the amount of paperwork, the number of reviews it takes to get to a milestone decision is just extraordinary,” he said. “The PMs that we have that are supposed to be managing their programs are spending all their time in the Pentagon going through OIPTs [overarching integrated product teams] and IPTs and things like that. So we should not be surprised when one of our programs goes off track because the people that are supposed to manage it are in the Pentagon talking to generals and [senior executive service officers] and things like that. I’m kind of a heretic on that subject and I would say, start from scratch. Burn down the entire house and build over…Many of our regulations are based on a particular instance where we failed, but the cumulative effect is it’s too overwhelming.”