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The Cost of Culture: Controlling DOD's Runaway O&M Spending

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Journal article

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Since September 11, 2001, the Department of Defense DoD has been engaged continuously in combat. As operations subside and DoD attempts to recapitalize its forces, it faces a different yet extremely critical threat unsustainable operations and maintenance OM cost growth. OM costs are skyrocketing, reducing funding available for recapitalization. With major budget cuts looming, DoD must address the root causes of the rising costs. Several recent studies have attempted to pinpoint the root cause of the huge OM cost growth. Many have discussed growing healthcare costs and others have dwelled on the increased use of contracted support. These are only symptoms of the problem, not the root causes. The OM cost growth is, at its core, due to an underlying culture that does not incentivize development of cost-effective solutions. DoD must counter this growth by instituting incentives and rewards that encourage unit-level commanders to accomplish their assigned missions under budget. Effective incentives vary depending on whether DoD is operating at steady-state, in a war, or absorbing a postconflict drawdown. Potential solutions for each case are presented herein. OM funds pay for DoDs day-to-day operating expenses, including training, supply, and equipment maintenance of military units as well as the administrative and facilities infrastructure of military bases salaries and benefits for most DoD civilian employees depot maintenance activities fuel purchases flying hours base operations consumable supplies health care for Active-duty Service personnel and other eligible beneficiaries Reserve Component operations and DoD-wide support operations including several combat support agencies, four intelligence agencies, and other agencies that provide common information services, contract administration, contract audit, logistics, and administrative support to the military departments.

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  • Administration and Management
  • Economics and Cost Analysis
  • Military Forces and Organizations
  • Military Operations, Strategy and Tactics

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