A group of business executives asked by President Reagan to examine government practices said yesterday that the Defense Department could save more than $28 billion each year through better management.
The Reagan administration has proposed a $274.1 billion military budget for fiscal 1984.
The President's Private Sector Survey on Cost Control proposed sharp cutbacks in payments to military retirees, funding of major weapon systems and the number of military bases and commissaries in the United States.
Many of these recommendations have been made before, but they may carry more weight coming from the usually conservative community of chief executive officers of such companies as Prudential Insurance Co. of America, Johnson & Johnson and Morgan Guaranty Trust.
Defense Secretary Caspar W. Weinberger promised to "study their proposals with care," but rejected the commission's politically sensitive recommendations on retirement pay and spoke doubtfully about other suggestions.
Weinberger said it would "be cruelly unfair for the American people to perceive that vast savings can be realized within a very short time."
The commission report acknowledged that management of the Defense Department, which spends more money and employs more people than any other organization in the western world, is "an awesome task." Rational management is made difficult, the private executives concluded, chiefly because of congressional interference and rivalry among the Army, Navy and Air Force.
In addition, the commission said military retirees, defense contractors and other pressure groups are convinced they are "entitled" to benefits they have historically received.
Military spending makes up 74 percent of the "relatively controllable" portion of the federal budget, which "presents a major opportunity for the public, press, lobbyists and Congress to help decide how and where vast sums of money are spent," the panel said.
Several task forces of the commission worked separately to find $104.5 billion in potential savings during a three-year period. A spokesman for the commission said overlapping of the recommendations could reduce the total in the final report by about 20 percent.
The largest proposed savings, $10.5 billion per year, came in weapons purchases, as the report warned against "the huge out-year costs of weapons now being developed" and called for Defense Department "discipline to reduce the number of major system new starts each year."
The group said military retirement pay is "rapidly becoming unaffordable for the nation," and recommended four changes it said would save $6.9 billion during their first three years. The report said that military pensions cost at least six times as much as attractive private pension plans and that the system's unfunded liability will rise from the current $500 billion to $1 trillion by 1988.
Weinberger said the recommended "tampering" with military retirement would "create havoc with the morale and readiness of our troops and would thus damage our ability to deter war."
In another recommendation, certain to provoke a hostile reaction among veterans, the commission suggested "closing virtually all commissaries in the continental United States."
The report said 59 percent of the patrons of the subsidized stores are retired military personnel.