Carter: ‘Better Buying Power’ Drives Defense Acquisitions

WASHINGTON, Feb. 23, 2011 — Sup­port­ing the war effort and man­ag­ing the bud­get are top jobs in the office of acqui­si­tion, tech­nol­o­gy and logis­tics, and both have inten­si­fied with the Pentagon’s man­date to do more with less, the Defense Department’s acqui­si­tion exec­u­tive said.
Ash­ton B. Carter gave the keynote address on the defense effi­cien­cy ini­tia­tive to an audi­ence of 500 here last night at a meet­ing of the Cen­ter for a New Amer­i­can Secu­ri­ty.

Ashton B. Carter, undersecretary of defense for acquisition, technology and logistics
Ash­ton B. Carter, under­sec­re­tary of defense for acqui­si­tion, tech­nol­o­gy and logis­tics, briefs reporters at a Sept. 14, 2010, Pen­ta­gon news con­fer­ence about a Defense Depart­ment ini­tia­tive to save up to $100 bil­lion over five years by imple­ment­ing reforms in acqui­si­tion and pro­cure­ment pol­i­cy.
DOD pho­to by R.D. Ward
Click to enlarge

“As one of the prongs of the effi­cien­cy ini­tia­tive, [Defense Sec­re­tary Robert M. Gates] asked me to devise a plan for find­ing effi­cien­cies with­in $400 bil­lion of the $700 bil­lion defense bud­get that is my area of respon­si­bil­i­ty,” Carter said, “name­ly, that which is con­tract­ed out of the depart­ment for goods and ser­vices.” Gates intro­duced the effi­cien­cy ini­tia­tive dur­ing a May 8 speech at the Eisen­how­er Library in Abi­lene, Kan.

“This led to some­thing called ‘bet­ter buy­ing pow­er,’” which he and Gates intro­duced Sept. 14, Carter said.

“It takes the form of guid­ance from me to our acqui­si­tion work force — 147,000 acqui­si­tion pro­fes­sion­als — on how they can get, as I put it, more with­out more, because we’re not going to have more.”

The objec­tive is to deliv­er the warfight­ing capa­bil­i­ties need­ed for the mon­ey avail­able, he added, by get­ting bet­ter buy­ing pow­er for warfight­ers and tax­pay­ers. The 23-point strat­e­gy seeks to restore afford­abil­i­ty in defense pro­cure­ment and to improve defense indus­try pro­duc­tiv­i­ty, Carter said. Each point was devised with input from the defense acqui­si­tion work force and from part­ners in indus­try, he said.

Major themes of the strat­e­gy, accord­ing to Carter’s guid­ance roadmap, include tar­get­ing afford­abil­i­ty and con­trol­ling cost growth, pro­vid­ing incen­tives for defense indus­try pro­duc­tiv­i­ty and inno­va­tion, pro­mot­ing com­pe­ti­tion, improv­ing the acqui­si­tion of ser­vices, and reduc­ing bureau­cra­cy.

“Our first effort has to be at afford­abil­i­ty, and that has to be for new pro­grams we’re begin­ning and ones we’ve already begun,” Carter said. An exam­ple, he said, is the the next-gen­er­a­tion bal­lis­tic mis­sile sub­ma­rine that will replace the Ohio-class nuclear mis­sile-car­ry­ing sub­ma­rine in the 2020s.

“When we got the first design and cost esti­mate for the SSBNX, we were com­ing in at $7 bil­lion apiece. If the Navy spent that much in the peri­od 2020 to 2030 on the SSBNX, it wouldn’t be able to buy any oth­er ships. Said dif­fer­ent­ly, that ain’t hap­pen­ing,” Carter said.

“Rather than head down a road that was sure to lead to a bro­ken pro­gram, we had to back up and look at the dri­vers of the design,” he said. These were tube num­ber, tube diam­e­ter, degree of stealth, flank speed and oth­er fac­tors that drove the over­all cost.

“We began to shape the design with afford­abil­i­ty as a require­ment,” Carter said. “And we found we could do that.” The Navy’s cost now is down to about $6 bil­lion per sub­ma­rine, with a tar­get of $4.9 bil­lion, he added.

“And that’s the kind of thing we’re going to have to do with every­thing we’re start­ing now,” Carter said.

But some pro­grams are already in progress, Carter not­ed. “They were start­ed, and now here we are,” he said. “We have them, and we need to con­trol costs on them.” Com­pe­ti­tion is anoth­er big dri­ver of effi­cien­cy, and the Defense Depart­ment tries to use com­pe­ti­tion as cre­ative­ly as pos­si­ble, Carter added. In the recent case of the lit­toral com­bat ship, he said, two dif­fer­ent sea frame mak­ers asked to pre­pare bids for a sub­se­quent buy.

“When we got the bids in,” he con­tin­ued, “the num­bers sug­gest­ed to me that both ship­builders believed they were enti­tled to build these ships for us.”

Defense Depart­ment offi­cials decid­ed that only one ship­builder would win the con­tract, and asked each con­trac­tor to bid on build­ing 10 ships, based on the assump­tion that only one com­pa­ny would win. Oth­er incen­tives were added to the con­tract, Carter said, and when the bids came in again, “they were sub­stan­tial­ly low­er, because the peo­ple com­par­ing them had been able to think of plau­si­ble ways to reduce the costs.”

The bids were so attrac­tive, Carter said, “that we decid­ed to buy all 20. It was a great deal.”

The Defense Depart­ment doesn’t make any­thing, he not­ed.

“All of the weapons sys­tems and equip­ment that make us the best mil­i­tary in the world — and that is, next to our peo­ple in uni­form, our great­est asset as a mil­i­tary pow­er — are made in indus­try.”

The defense indus­try and its tech­no­log­i­cal health and vital­i­ty are a nation­al asset, Carter said.

“In that sense, the tax­pay­er and the warfight­er, whom I rep­re­sent, have the same inter­est as a long-term share­hold­er in the defense indus­try.”

U.S. Depart­ment of Defense
Office of the Assis­tant Sec­re­tary of Defense (Pub­lic Affairs)

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