Military Planners Discover a Case of Missing Defense Cuts

WHEN new Defense Secretary Les Aspin and his team sat down to plan the Pentagon budget for 1994, they suspected that the numbers bequeathed them by President Bush did not quite add up.

Analysts have long charged that Mr. Bush's defense plans overestimated the potential savings from management changes, while understating the costs of buying certain weapons.

After perusing the numbers, Mr. Aspin's planners figured that $2.5 billion in savings for 1994 claimed from administrative streamlining may be a mirage. Thus Aspin's planned $11 billion 1994 reduction might, in the end, only shrink Pentagon spending by $8.5 billion actual dollars.

Last week, Aspin named a panel of experts from outside the Pentagon to go over the spending figures and establish a realistic baseline from which to estimate long-term costs.

"A lot of people have said these are not a real savings. He wanted an outside group to look at this," said Pentagon spokesman Bob Hall.

Members of the panel are Philip Odeen, head of the consulting firm BDM International; Jeffrey Smith, a former counsel for the Senate Armed Services Committee; and Edward Aldridge, a former secretary of the Air Force.

They will study projected expenses for weapons purchases, environmental cleanup of bases, and maintenance of force levels, among other things. But their particular focus will be the Bush-era Pentagon administrative cost-cutting effort, known formally as the Defense Management Review (DMR).

The DMR has long been a source of horror for military officials. It was introduced in 1989 by Secretary Dick Cheney as a way of cutting out management fat, with a much-promoted savings potential of $60 billion over the five years from 1992 to 1997.

DMR changes included such things as consolidation of supply depots, combination of overlapping data systems, and the like. While many officers say these initiatives are to the good, they claim that the $60 billion figure bore little relation to the actual DMR savings potential.

The Air Force, for instance, is penciled in for $25 billion in DMR savings. Of that, $12 billion is supposed to come from changes in logistics processes. In practice, Air Force logistics officials have been reduced to such practices as stripping spare parts from excess aircraft to meet their "management" savings targets.