The Defense Business Board (DBB) appears ready to advise DoD to make severe reductions to civilian staffs, contractor support, and DoD organizations. Secretary Gates had asked the DBB to recommend ways that DoD could meet his target of finding $100 billion in budget savings over the next five years (see Highlights, June 18, 2010). In a draft report issued last month, the DBB identified four major issues that present significant challenges to controlling DoD overhead spending: 1) overhead work has exploded because DoD has not established adequate controls; 2) increased use of more personnel to meet warfighting needs has increased costs significantly; 3) DoD cannot identify the true the cost of work performed by contractors; and 4) a large portion of active military personnel are performing work that is either “not inherently governmental” or that could be performed by civilians. The DBB said that the study is not meant to criticize current or previous leadership and it does acknowledge that some improvements have been made. The Board also recognizes that DoD has had to fight two wars and make significant improvements to homeland security during the last 10 years. But, the study strongly charges that some operating trends have greatly added to DoD costs and threaten to undermine long-term sustainability of DoD programs. For example, DOD has to pay more for a smaller number of people, a reduced force structure, and a declining and aging inventory, while headquarters and staffs, numbers of commands and organizational layers are increasing. The draft report further states that the expansion and associated cost growth of military entitlements (including benefits, health care, and retirement costs) have become unsustainable. It identified some 340,000 military personnel that work in “commercial” activities, which costs more and drains needed personnel from military operational requirements. The draft report points to the increased number of organizations and staffs without proper controls to “ensure efficiency.” And it criticizes the lack of oversight and proper planning for the large number of contractors that have been employed. The DBB study recommends instituting a number of “best business practices” to be instituted immediately: 1) reduce civilian levels by 15 percent (as much as 111,000 people, according to some calculations) or back to the FY2003 levels and institute a hiring freeze; 2) freeze contractor spending at the current levels, identify the actual “headcount “ of contractor personnel and then reduce to FY2003 levels; 3) eliminate “organizational overlap” starting with the Office of the Secretary of Defense (OSD); 4) eliminate JFCOM and downsize the Combatant Commands; 5) reduce travel, conferences, and the frequency of duty station moves. And in a budget execution move, the draft report calls for a modification of end of year “use it or lose it” spending polices. The DBB will make its final report and recommendations this fall.