Why Chairman Thornberry Failed To Tame DoD’s Fourth Estate

The “fourth estate” — the defense headquarters, agencies, and activities not inside the military departments— has come under increasing criticism as it has grown from 7 percent of the DoD budget in 1990 to 18 percent today. But when House Armed Services Chairman Thornberry proposed eliminating seven agencies and reducing personnel by 25 percent, he faced strong opposition. In the HASC’s draft bill, he scaled the proposal back to eliminating just three agencies. But that didn’t work either. During the committee’s markup of the House defense policy bill, members still pushed back.

What remains in the House version of the 2019 National Defense Authorization Act is a requirement for DoD to eliminate two agencies, review and restructure several more, and cut personnel by 25 percent. So why did Thornberry have so much difficulty where his Senate counterpart, Sen. John McCain, was able to push major changes to DoD’s planning and acquisition processes all the way through the legislative system two years earlier? The answer lies in the preparation, the need for nuance in recommendations and the difference between changing processes and eliminating organizations.

That something needs to be done about the fourth estate is widely supported. The first problem is its size. The fourth estate has grown relentlessly. The first, the Defense Communications Agency (now the Defense Information Support Agency, DISA), was established in 1960 to ensure that the services could talk to each other. The Defense Supply Agency (now the Defense Logistics Agency) followed in 1961 to procure common supply items. Some agencies were created to execute specialized functions like POW/MIA recovery, treaty implementation, technology protection or commissary operation. Some do have war fighting functions like the Combatant Commander headquarters (Special Operations Command, for example), the Missile Defense Agency, the National Security Agency, the National Reconnaissance Office and the Defense Intelligence Agency. Finally, there are Pentagon offshoots like the Defense Legal Services Agency and especially the Washington Headquarters Services, the agency that everyone loves to hate, which provide administrative support for headquarters in the Washington area. Today there are 18 defense agencies and nine field activities.

The centralization of support functions has produced efficiencies but has also brought distance from customer and a feeling that the processes and costs were being set by the agencies and not by the services. Navy Secretary Ray Mabus complained, “The theory… is great, [but] it’s unclear if it saves us anything.” Further, many agencies and field activities represent specialized activities that are important for particular functions – schools, finance, accounting, security assistance, for example – but are divorced from the warfighting missions of the military services. 

None of these agencies have been closely managed. In theory, each was overseen by a senior official in the Office of the Secretary of Defense, but the OSD staff lacked the time, expertise, and incentive to manage them closely. Far easier to pass along agency budget requests than to take up the thankless job of pushing back, so that some amount of funding could be saved and tossed back into DOD’s central pool. This has been a particular annoyance to the military services, who feel they receive close scrutiny in the budget process whereas the defense agencies get a pass.

So if the fourth estate has grown so large and generated so much criticism, why wasn’t Thornberry’s effort more successful? The first problem was a lack of adequate preparation. There was only one hearing specifically on this subject and the two witnesses, both deeply knowledgeable about the fourth estate, described the need for reform but also the many challenges involved.

For contrast, McCain conducted six hearings with 37 witnesses when considering “Goldwater–Nichols 2.0” reforms in 2015–2016. Both efforts fall short of the immense preparation conducted before the original Goldwater-Nichols legislation of 1986. The lesson seems clear: radical reform requires thorough preparation. 

The second problem, following from the first, was a lack of nuance in the recommendations. It’s fine to say that agencies should be eliminated, but what happens to their functions? If DISA were eliminated, for example, who will run global networks? Who will ensure interoperability? Will DoD just re-create DISA somewhere else under a different name? Some functions might revert to the military services and become more responsive to customers, but that might also lose the efficiencies of centralization and end up costing more. In the 1990s, when the services complained about excessive growth in the fourth estate, then-secretary Perry asked the service chiefs whether they wanted to break up some of the agencies and execute the functions themselves. None did.

There is a theory that congressional committees can throw things up on the wall and then see what sticks. Radical proposals do put topics on the national agenda and force a discussion. That’s useful. But some walls are slippery and mushy proposals usually just fall to the ground. This happened to some of McCain’s proposals. Deep cuts to the number of general officers and senior civilians were proposed and then walked back to something close to the status quo when the committee could not specify where the cuts would come from or what the impact would be.

Finally, process is relatively easy to change. No one loses a job, and the organization produces essentially the same outputs, though in a different way. Restructuring and eliminating organizations threatens jobs and changes what is produced. It’s much more threatening.

So is reform hopeless? Of course not. Overhead activities in any organization need periodic review, especially in government where it is easy for energetic and well-meaning leaders to incrementally expand their fiefdoms over the years. However, major change really is hard and requires expending some political capital. Mackenzie Eaglen has noted the many (mostly failed) previous attempts at overhead reform. So with that in mind, here are some suggestions for a way forward.

• Do the necessary but pretty boring homework. This requires a lot of staff time and many hearings, but it lays the intellectual groundwork. Agencies are all different, some are not even “overhead”, so each needs a different approach.
• Put someone in charge at DoD who has both the expertise and the objectivity to look at overhead activities critically. Thornberry’s bill would empower DOD’s chief management officer (CMO) to oversee defense agencies. That’s a sensible approach. The CMO has the seniority, staff, and detachment to give the agencies the budget scrub that they need.
• Look at the incentive structure. Establishing mechanisms that reward cost savings and increase focus on customer satisfaction would drive reform from within.
• Establish metrics. Finding good metrics for overhead activities is difficult, but some are useful, and the department does this to an extent already. Metrics at least establish parameters around which discussions about responsiveness and cost can be conducted.
• Think about activities that no longer need to be done by DOD. This is tough because every activity has supporters and a long history. Nevertheless, there are possibilities, as Breaking Defense has reported before. This is the only way to eliminate entire organizations and get large savings. 
• Use process to advantage. Requirements for certifications, transparency, reviews, and reports are often mere bureaucratic annoyances but, if well-crafted, can sometimes provide the procedural mechanism for change. The bill’s proposed five-year review and report to the Congress on agency efficiency may provide this opportunity.
• Don’t reorganize just to “do something”. Reorganizations divert energy inward, distracting from focus on the mission. As Susanna Blume of the Center for a New National Security observes, DoD is still reeling from previous reorganizations, like the breakup of the acquisition structure.

As a long time denizen of the fourth estate, I appreciate both its strengths and its weaknesses. It does provide essential services that the Defense Secretary needs and that the military services are either unwilling or unable to provide by themselves. Centralization of support activities also allows the military services and their leadership to focus more tightly on warfighting activities and to be less distracted by support functions.

On the other hand, it is easy for these activities to become the classic “self-licking ice cream cones”, which incrementally expand their activities in order to do their mission more thoroughly, without reference to their original purpose or scope. So Congressman Thornberry is on the right track, but his committee’s approach needs some modification to be successful.

Mark Cancian, a member of the Breaking Defense Board of Contributors and a former senior staffer at the Office of Management and Budget, is a defense expert at the Center for Strategic and International Studies.