This report mentions DOD accounting systems as a potential source of savings.
I work in the space. A consultant for government entities, in the accounting arena.
Accounting has become expensive in government, ironically to protect against fraud and abuse by allowing auditors to drill down into transactions. Systems like SAP and Oracle, implemented by KPMG and Accenture are very expensive. This expertise is provided by expensive contractors. The Pentagon could save some by directly hiring the expertise but they do not. Its like NASA, as they hire contractors to build space vehicles. They dont attempt to do it in house either.
That said, it is well known in my circles (Oracle accounting systems) that Federal Government gigs are the best paying, and highly prized. The Pentagon and other agencies may do well to scale back rates and expense allowances, perhaps by 15%. Still significant savings, but probably not $125 billion.