This report aims at describing how the choice of organizational structure (allocation of tasks and responsibilities), down-sizing as well as outsourcing drive costs. The criterion on which to organize is that the authority to make decisions rests with the party who best understands what the immediate circumstances call for.The conclusions are that the Swedish Armed Forces could be managed more cost-efficiently if * the decision-making unit has adequate information and competence, * the decision-making unit is responsible for the consequences of its decision-making, * the units are organized to breed critical mass.