Hagel Contends with McNamara, Again

Chuck Hagel is off to a strong start in his new position of Secretary of Defense.  Clearly from his first speech at the National Defense University, he understands the many complex challenges ahead of him at the Pentagon and appears eager to take them on.  Many of the obstacles on Hagel's path to reform were emplaced by one of his predecessors, Robert McNamara.

It is important to place McNamara’s tenure in historical context.  McNamara was part of the Kennedy administration, elected as fresh-minded energetic reformers bent on fixing the problems within government and invigorating America.  McNamara was a perfect fit.  He and his band of “whiz kids” attempted to bring the practices of corporate America to the Pentagon.

McNamara’s approach of centralized management at the Pentagon resulted from his experience as the president of Ford Motor Company. This managerial style was typical of the era and the booming US economy could absorb any extra overhead it created. Today, most successful large US firms have abandoned that management philosophy in favor of a more decentralized, flatter approach.

McNamara also had to consider the Soviet threat and was particularly concerned with the rapid military expansion by either of the two super powers. McNamara valued stability and implemented processes intended to ensure there were no unexpected breakouts of military technology that could alarm the Soviets and force them into a miscalculated response. This approach is the antithesis of todays’ efforts to innovate within the military services.

For instance, McNamara’s costly and cumbersome Planning, Programming and Budgeting System is labor intensive and involves thousands of workers to complete each year.  As former Secretary of the Navy Richard Danzig noted in a report for the Center for a New American Security, the centralized management processes at the Pentagon result in decision-making measured in years and decades, compared to similar weeks or months in the private sector.

Centralized management also affects the way the Pentagon designs and purchases equipment for the warfighter.  In the 1940s and 1950s, the military services could take a concept for a new weapon and put it into operation within a few years.  Today, because of the numerous layers of oversight and program reviews, the process takes decades.

In 2011, the US Army used a hypothetical ground vehicle system to test how the acquisition process affects program management. Assuming all reports were completed in just one day and no system testing was required, the study concluded it would take a minimum of 16.5 years to navigate through the unwieldy bureaucratic process. Of course, the cost of this overhead is built into every program. The number of canceled programs and frequent cost overruns provide clear evidence to the effectiveness of this approach.

According to one RAND study, sixty-three different initiatives were undertaken from within the Pentagon and from the Hill to reform the DoD acquisition system from 1966 to 2002. Many of these reform efforts simply added layers of bureaucracy atop existing layers, a problem known a bureaucratic accretion. Yet none of the reform initiatives challenged the underlying premise of the need or benefit of centrally managing the defense acquisition system – does the value outweigh the total cost?

As part of his centralization efforts, McNamara expanded defense agencies – large organizations designed to support the entire defense enterprise.  In 1961 there were only 2,000 Pentagon employees working outside the three military departments.  That number increased to 137,000 today, supported by an unknown number of defense contractors.  This growth occurred while the size of the military was reduced by half. The so-called “fourth estate” within the Pentagon now consumes nearly 20 percent of the entire defense budget.

McNamara’s centralized management, supported by each of his successors, created a complexity problem within the Pentagon. In response to the 2008 “too big to fail” controversies, the problem of ”too big to manage” was identified in the Wall Street Journal. Large organizations often become too big and too complex to manage. Four types of organizational complexity could affect a large organization: dysfunctional, designed, inherent and imposed. Unfortunately, the DoD suffers from all four types.

In the days following Hagel’s speech, former White House advisor Cass Sunstein highlighted the Obama administration’s success in reducing federal regulations at a Brookings Institute event. Sunstein warned of the perils of complexity in government and stressed the need for simplification.  Nowhere is that approach needed more than at the Pentagon.

Conditions are right for meaningful defense reform and the policy window is wide open. An alarmingly high national debt, waning public support for defense spending and the Obama administration’s commitment to simplifying government are catalysts for reform. 

Let’s hope Hagel’s reform team recognizes the current management structure is neither efficient nor effective and embraces the concept of simplicity within the Pentagon.  This will involve challenging some fundamental premises that date back to Robert McNamara’s tenure as SECDEF.