The “Shrink Wrap” Strategy

F-35 Record of Decision signed

Editor’s Note: We recently announced a contest inviting readers to submit their ideas about how the Defense Department can both cut spending and maintain its ability to respond to a full spectrum of strategic challenges.  We received a number of great entries, and our esteemed panel of judges has chosen the top three.  Congratulations Bryan McGrath, author of the third place entry!  Come back tomorrow to read the second place submission.


Space limitations preclude a detailed discussion of the strategic notions underpinning these recommendations.  However, two assumptions must be stated up front. First, great power war is unlikely in the near-term, allowing the U.S. to take additional risks in conventional capabilities for a time. Second, pay and benefits for new accessions must change if our military is to retain relevant capabilities for future challenges.

Pay and entitlement reforms include:

  • Reducing the rate of growth in military pay and housing allowances to the rate of inflation.
  • Making TRICARE more like civilian insurance by instituting co-pays for active-duty and raising annual fees for retirees, which would be pegged to retirement rank.
  • Implementing a lump-sum retirement option for those currently on active duty, while shifting to a hybrid retirement system new accessions.

— Estimating savings of about $8 billion each year.

This approach envisions using this period of lower direct threat to accept reduced readiness now (i.e., the aggregate amount of ready forces on any given day), protecting investment in the new equipment and capabilities relevant for the future. Compared to the plan described in the FY14 President’s Budget, I would:

  • Decommission or shift to the reserves portions of the force only needed in operations for which the U.S. will have significant warning time. America had years to prepare for World War I and II, Desert Storm and Iraqi Freedom before a precipitating event brought us into conflict.
  • Permanently reduce Army active end-strength to about 460,000 by decommissioning two infantry Brigade Combat Teams (BCT) and two armored BCTs and moving one of each to the reserves. This would retain the core rotational force needed to continue regionalized security cooperation, as described by General Odierno in his 2012 Foreign Affairs article. I would reduce Marine Corps end-strength to 176,000 (about the 2001 level), retaining the nine Marine Expeditionary Units needed for rotational deployments on Navy Amphibious Ready Groups. I would shift half of the current active F-16 fleet (about 250 aircraft) and one-fourth of the active C-17 fleet (~40 aircraft) to the reserves and decommission one-fourth of the active C-130 fleet (~30 aircraft). In the Navy, I would decommission four fighter squadrons, reducing the capacity of the oldest short-range aircraft in the fleet, which have limited utility in future conflicts. Savings would come from less operations and maintenance and reduce end-strength in the lowest cost manner (attrition and limited involuntary separations, as opposed to large Reductions in Force).

— I estimate these actions would save about $16 billion annually.

  • Stop or reduce procurement of new systems with less relevance to the emerging security environment, or which I could accelerate construction of when the need arises. Cancel the Ground Combat Vehicle and Joint Lightweight Tactical Vehicle programs, reduce by half the purchases of F-35A and C, stop the current Littoral Combat Ship (LCS) program at the current 24 and extend the construction interval for aircraft carriers (CVN) from five to seven years. In place of the LCS, the U.S. should promptly develop a “patrol frigate” based on an existing hullform.
  • As part of a “new” New Look, we would end the SSBN (X) program as currently constituted. I would reduce and shift this R&D investment to support a more advanced Block V and follow-on of the Virginia SSN. These SSN would incorporate payload modules that could host a follow-on nuclear ballistic missile if the nation’s security situation changes, requiring a more survivable deterrent. I would extend the service life of the Minuteman III missile to sustain the nation’s strategic weapons capacity into the 2030s.

— I estimate these actions will save about $7 billion annually, less contract cancellation costs.


Shrink Wrap

  • Deactivate, but not decommission, units whose equipment will remain relevant into the 2030s, but whose capacity is not necessary today. This would involve placing ships, aircraft and equipment in “layup,” reallocating some unit personnel to reduce shortfalls elsewhere, and temporarily reducing overall end-strength. When the savings from permanent end-strength reductions accrue, these elements of the force will be modernized and reactivated.This element is central to the approach. It enables significant savings while not giving up capital investments we will need later—especially if smaller defense budgets continue.Deactivations include:  two CVN, one carrier air wing, all 22 cruisers (CG), eight destroyers, half the active F-16 fleet (~250 aircraft), one-fourth of Army aviation forces and one-fourth of Army air defense artillery brigades. The ships, aircraft and equipment would be defueled and placed in layup with caretaker crews. This would reduce the conventional force structure we use today for routine presence missions to stand by for a potential major conflict. Presence missions will shift to less expensive forces.

— I estimate savings of about $6 billion annually once temporary end-strength reductions are achieved. Savings and costs incurred will be reduced as these units are returned to service later.

  • Continue investing in—and transition—technology and capabilities that will give U.S. forces an advantage against likely competitors in the next decade. In particular, this approach would continue by buying two DDG and two-to-three SSN a year; complete development of the next long-range bomber; expansion of cyber capabilities and fielding on land and on ships electromagnetic rail gun, high-powered solid state laser and advanced electronic warfare systems. The plan would enhance space capabilities including new co-orbital micro-satellites.

— These enhancements will cost about $8 billion a year.

  • Reduce overhead functions such as headquarters and civilian employees (including in defense agencies) commensurate with reductions in the active force. I would also stop funding for exchanges and commissaries in the U.S.

— I estimate about $6 billion could be saved with these measures.

This plan will equip the DoD with the technology and the force structure to be relevant to the security challenges likely in the coming two decades, while positioning it to expand in relatively rapid fashion when economic and/or security needs dictate.

This is admittedly a bad plan; but it is better than simply shrinking the current Joint Force proportionally, hollowing it as we go.


Bryan McGrath is the founding Managing Director of The FerryBridge Group. A retired Naval Officer, Bryan spent 21 years on active duty including a tour in command of USS BULKELEY (DDG 84).  His final duties ashore included serving as Team Lead and Primary Author of the US Navy’s 2007 Maritime Strategy “A Cooperative Strategy for 21st Century Seapower.” McGrath is an Adjunct Fellow at the ‎Hudson Institute and Assistant Director of the Hudson Center for American Seapower.


Photo credit: Matt Morgan