Easiest way to cut major costs right now would be to get rid of the current way the REFO operates. I did not need to be issued Gen III Cold-Weather Gear to go to Iraq, neither did the other 170,000 troops.
Equipment is currently distributed to deploying troops and the only concern is time, not necessity. The things I needed in combat were my M4, my IBA (replaced by the IOTV), my kevlar (replaced by the MICH then the ACH), my optics (M68 replaced by ACOG with J-Point replaced by improved ACOG), and my uniform (ACUs being replaced by Multi-Cam being replaced by who knows what).
All "comfort" and "gucci" gear should be bought and paid for by the Servicemembers (the majority of whom already buy better gear instead of wearing the issued crap).