Atwood Faces Cost-Cutting Task : Efficiency Is Deputy Defense Secretary’s Hallmark

As he sat smiling at the witness table answering senators’ questions, Donald Jesse Atwood Jr. did not look like a man who will forgo millions of dollars for the opportunity to suffer through a $100-billion headache for the next four years.

But that is what the General Motors Corp. vice chairman will be doing as the 22nd deputy secretary of defense. He will play the leading role in cutting $100 billion from former President Ronald Reagan’s rearmament program in the Pentagon’s new five-year plan.

For that opportunity, he has given up his annual compensation of more than $1 million from General Motors and settled for a Pentagon salary of $89,500 a year.

“My primary responsibility will be in the day-to-day operation of the Pentagon, taking primary responsibility in directing the planning, programming, budgeting, acquisition and program management,” the President Bush appointee told the Senate Armed Services Committee during his confirmation hearing. Defense Secretary Richard B. Cheney will take care of external affairs, traveling around the world to discuss military policies and defending the Pentagon budget at home before congressional committees.

It is the deputy secretary who referees fights between generals and admirals and heads various boards that decide how much money each military service should get, which weapons should be canceled and which ones started.

Considering Bold Steps

Atwood, according to those who know him well, gave a true portrait of himself at his confirmation, when he was quiet but incisive. His friends say he is neither a fist-pounder in the mold of one of his predecessors, Texas Gov. Bill Clements, nor a cautious lawyer like the man he will replace, William H. Taft IV.

But the former head of GM’s Hughes Aircraft Co. and several other of the corporation’s entities is already considering, but not committed to, the bold steps to make the Pentagon more efficient. Efficiency was his hallmark in industry. He has been sounding out the defense industry and retired military leaders on such reforms as these, according to industry executives:

- Eliminating such layers of bureaucracy as the Air Force Systems Command at Andrews Air Force Base and the Army Materiel Command in Alexandria, Va.

- Changing the present procurement system so contractors would not have to pay so much of the research and development costs on big weapons, such as the Advanced Tactical Fighter. Critics contend this arrangement impels contractors to make up for losses during the production phase when there is the most opportunity for big savings.

- Improving relations between the Pentagon and industry by drawing a wider line between inspectors looking for flaws in weapons being produced and investigators trying to build criminal cases for fraud.

A Family Man

“I never saw anyone who could get to the heart of the matter faster,” said one associate who has observed Atwood, 64, wrestle with these questions since moving into a temporary Pentagon office.

With generals and admirals, Atwood has been affable and low key. But in one recent session with the Joint Chiefs of Staff, a participant recalled, Atwood put down an argument with the terse comment, “That makes my point all the stronger.” There was no further debate.

His friends say Atwood is devoted to his family and has shown he is not a Pentagon workaholic who never gets home for supper. Atwood smiled appreciatively during his confirmation hearing when a former Navy secretary, Sen. John W. Warner (R-Va.), advised him to leave the Pentagon early because no matter how late he stayed, the military would change what he did before the next morning.