The Department of Defense is about to undergo a fundamental shift in its organization and how it buys weapons, provides operational support to warfighters and employs its people.
The Pentagon has previously been very difficult to change. But now, the pressure from President Trump’s Department of Government Efficiency could force needed reform. As detailed in a recent American Enterprise Institute report, Elon Musk’s five-step algorithm could help the administration propel the modernization of the American military.
One of the most important principles must be that the savings generated are reinvested in the capacity and capability of the fighting force. The world is too dangerous to risk another so-called “peace dividend,” which is just another opportunity for our adversaries to re-arm and pull ahead.
Organization change is the top disruption that needs to occur because ineffectual processes are driven by dysfunctional organizational structure. The Pentagon has three major overlapping, duplicative and inefficient layers of management, such that, despite the hardworking diligence of the workforce, the whole is actually less than the sum of the parts: the Office of the Secretary of Defense, to include the defense agencies and field activities; the Joint Staff and Combatant Commands; and the three military departments.
To change these organizations, one must start at the top, specifically by reducing the number of political appointees by 30 percent, which would then allow for similar reductions to general and flag officers and senior executive service civilians.
The Department of Defense should move all military officers out of Office of the Secretary of Defense and the service secretariats, and it should repeal the joint service requirement for military officers, which would enable a reduction in the Joint Staff and Combatant Commands. It should also leverage AI and predictive analytics to improve the efficiency of defense agencies such as the Defense Logistics Agency, Defense Information Systems Agency and the Defense Finance and Accounting Service.
DOGE must also force the department to question every requirement. The Pentagon should clear out programs that are no longer needed, particularly those that are over-budget, outdated or produce no military capability. Once the unproductive load is shed, the Pentagon can simplify and optimize the acquisition system so that non-traditional firms can provide much needed warfighting capabilities.
Similarly, it can streamline resourcing by creating a fiscal 2026 budget that eliminates the hundreds of thousands of discrete line items in procurement and the Research, Development, Test and Evaluation Appropriations. Instead, it should ask Congress to appropriate the money into broad mission areas, as recommended by the Commission on Planning, Programming, Budgeting and Execution. More specifically, the budget request should include a $34 billion multi-year appropriation to buy drones and new information technology systems.
The Pentagon will need to critically evaluate and reduce the largest single part of its budget: the $340 billion operations and maintenance accounts. This is twice the size of the $170 billion spent to develop and procure weapons; therefore, a 10 percent savings of the operations and maintenance budget could yield a nearly 20 percent increase in weapons funding. Operations and maintenance funds military training, base operations, contracted services and the civilian workforce, so diligence and testing will be necessary to protect readiness and the force as efficiencies are found and redirected.
The defense budget also contains about $15 billion in programs and activities that are not linked to warfighter capability, making them ripe for realignment, revision or removal from the federal budget altogether. For example, the commissaries — or grocery stores, in civilian speak — are considered part of the overall benefits package for uniform service members, their families and retirees. But they cost the taxpayer more than $1.5 billion per year while they struggle to provide modern services and value. They should, and can, be managed differently to provide better service at no cost to the taxpayer.
Last but not least are personnel reforms. This is where DOGE can assist in using automation to reduce support forces, increase war-fighting forces, and apply personnel to the highest productivity tasks. The labyrinth of military and civilian personnel statutory requirements, regulations, policies and authorities is complicated, as well as burdensome, outdated and, at times, contradictory. A full repeal and replace proposal is long overdue.
The department should also implement an evidence-based approach to measure the value service members place on different forms of compensation and career flexibility. Using this data, the department should create a package of reforms that include some combination of changes to pay, benefits and personnel policies to improve recruiting and retention of the right people with the right skills.
The civilian and military leadership within Department of Defense have a rare opportunity to partner with the political leadership to drive real change, with the ultimate outcome of producing better warfighting capabilities and the capacity that nation needs for its global leadership, security and prosperity. The Defense Department should embrace DOGE and its mission, and help focus its efforts on making necessary (if politically difficult) reforms.
Elaine McCusker is a senior fellow at the American Enterprise Institute (AEI). She previously served as the Pentagon’s acting undersecretary of defense (comptroller). Todd Harrison is a senior fellow at AEI. He previously worked as a senior executive in the defense industry and as an officer in the Air Force Reserves. Retired U.S. Army Maj. Gen. John G. Ferrari is a senior nonresident fellow at AEI. He previously served as a director of program analysis and evaluation for the service.
