Israel begins defense cost efficiency plan

TEL AVIV, Israel, Aug. 4 (UPI) -- Israeli officials have taken the first steps in a program that is to save about $8 billion in military spending over 10 years.

Israeli Chief of General Staff Lt. Gen. Gabi Ashkenazi said the first section of the plan called "Harvest Season" would involve maintenance of equipment for ground forces and the Israeli air force. Those changes should be worth at least $26.5 million a year, a statement on the Israeli military Web site said.

The Economist reported that Israel spent $16.2 billion on its military in 2008 and that its per capita spending of $2,300 was the highest in the world. If the stated target of Harvest Season is achieved, it would mark savings of about 5 percent of the total.

The Israeli Ministry of Defense and the military hired management consulting firm McKinsey and Co., which has offices in 52 countries and headquarters in the United States, to help find ways to make the Israeli military more economically efficient. The military's release said "dozens" of McKinsey employees have been granted Israeli security clearances and are to have "complete and open access" to all aspects of the military "with the exception of operational and intelligence areas."

Maintenance operations were selected as the first area for McKinsey to study. The analysts visited military units, watched work procedures, interviewed members of the military and ascertained their efficiencies in the field.

The military Web site statement said the maintenance processes were "world class" but added that efficiencies could be improved with better use of human resources and maintenance infrastructure.

"In addition to the financial savings, the implementation of these methods will allow the maintenance units to speed up their response times for the combat units who rely on them," the statement said.

Ashkenazi authorized implementation of the program, which is expected to be eased into use over several years. Additional suggestions are expected from McKinsey in the coming months.

The Jerusalem Post said McKinsey's plan suggested procurement and maintenance changes that could save the military's Technological and Logistics Directorate $53 million by the end of the year.

But the country's Finance Ministry discredited the effort, with one unnamed official telling the Post, "This is a joke, a piece of PR nonsense."

The Finance Ministry said instead the military should have implemented the Brodet Commission plan. That panel issued a report in July 2007 that alleged the Defense Ministry manipulated data given to the government in an attempt to increase the military's budget.

The commission also charged the Israeli military operated on the assumption that all of its financial demands would be met and so there was no incentive to improve efficiencies. It recommended a permanent economic forum be established to advise the Defense Ministry leadership.

It also recommended an increase in defense spending while saying the military should look to implement programs to save $8 billion by 2019.

In the most recent budget negotiations, the Finance Ministry said defense spending should be reduced by $795 million, but Prime Minister Binyamin Netanyahu actually added $265 million.