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 "If you want to look at real money, 20 percent of the Pentagon's
budget - one dollar out of every five - is spent on ... the Office
of the Secretary of Defense and defense agencies. Pure overhead,"
Mabus said during a speech at the conservative American Enterprise
Institute think tank.
Mabus said the Navy had cut spending on service contracts, which
accounted for about $40 billion out of the Navy's overall budget of
$160 billion, by 1 percent, saving about $4 billion. Further savings
were still possible, he said.
The U.S. Defense Department is girding for large budget cuts that
are due to resume in fiscal 2016 unless Congress revises existing
law. Mabus said he would do all he could to protect shipbuilding
accounts if the cuts went back into effect.
Mabus said the inability of Defense Finance and Accounting Services,
the payment services agency, to account for data that it had
received from the Navy could impede the Navy's ability to conduct a
clean audit this year.
 Nine of 10 of the agency's internal controls had been found to be
ineffective, Mabus said, adding, "Do we really need that?"
Mabus said he had learned while serving as governor of Mississippi
that consolidating agencies often made sense in theory but not
always in practice because it created larger, more bureaucratic
organizations.
For instance, he said the Defense Logistics Agency was set up to
purchase materials for the entire military and benefit from larger
economies of scale, but the Air Force and the Navy used different
types of fuel, which meant that goal could not be achieved anyway.
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"I think you ought to take a look at every one of these ... There's
a lot of duplication going on," he said.
He said the individual military services could also likely cut
overhead costs further.
Mabus also criticized the Pentagon's current approach to testing
weapons, noting that hundreds of millions of dollars were spent on
tests that were sometimes not needed.
For instance, he said, the Pentagon's office of test and evaluation
had criticized the Navy's littoral combat ships for not being able
to survive in a conflict, but the plan had never been to send those
smaller ships out by themselves, he said.
(Reporting by Andrea Shalal; Editing by Paul Simao)
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