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Hiring freeze, pay cuts to save DOD $25 billion

The Defense Department's freeze on civilian personnel levels and a govermentwide freeze on civilian pay together will generate about $25 billion in savings at the department, DOD officials told lawmakers March 29.

The Defense Department's freeze on civilian personnel levels and a govermentwide freeze on civilian pay together will generate about $25 billion in savings at the department, DOD officials told lawmakers March 29.

In testimony before a Senate subcommittee looking at Pentagon cost-saving efforts planned over the next five years, DOD officials said they planned to extend the freeze on personnel levels through fiscal 2013, making exceptions only to add to the DOD acquisition workforce as the department tries to shed acquisition contractors. The personnel freeze is anticipated to save about $13 billion.

Likewise, DOD said the governmentwide, two-year freeze on civilian pay will generate another $12 billion in savings. And, the department said it will save about $6 billion by reducing its reliance on service support contractors by 30 percent over the next three years.

DOD's plans also include steps to slow the growth in medical costs, which have skyrocketed, rising from $19 billion in fiscal 2001 to an estimated $52 billion in fiscal 2012. DOD also plans to adjust prescription drug co-pays to drive more health care enrollees to generic drugs and mail-order delivery.

DOD also outlined a proposal to increase Tricare enrollment fees for working-age retirees — the first such increase since the mid-1990s — and phase out subsidies for several private-sector hospitals where the department pays premium claims rates. Those changes are expected to save $7.9 billion through fiscal 2016.

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