USA — Carter Details Acquisitions Savings Plan to Congress

WASHINGTON — Improved acqui­si­tions process­es already are result­ing in Defense Depart­ment cost sav­ings, the under­sec­re­tary of defense for acqui­si­tions, tech­nol­o­gy and logis­tics told a con­gres­sion­al pan­el today.

Ash­ton B. Carter out­lined his plans to prune acqui­si­tions spend­ing, as part of a hear­ing before the House Armed Ser­vices Com­mit­tee to dis­cuss Defense Sec­re­tary Robert M. Gates’ broad­er ini­tia­tive to redi­rect fund­ing from duplica­tive and unnec­es­sary over­head costs to high-pri­or­i­ty warfight­er needs. Carter was joined by Deputy Defense Sec­re­tary William J. Lynn III and Marine Corps Gen. James E. Cartwright, vice chair­man of the Joint Chiefs of Staff. 

Carter over­sees the department’s $400 bil­lion annu­al expen­di­tures in con­tract­ed goods and ser­vices. Acqui­si­tions reform is a major com­po­nent of Gates’ ini­tia­tive to iden­ti­fy $100 bil­lion in sav­ings over five years in the department’s $700 bil­lion annu­al budget. 

“We have to fun­da­men­tal­ly change how we do busi­ness,” Carter said. “We can­not give our troops what they need unless we do so.” 

Too often, Carter said, DOD lead­ers have returned to Con­gress to ask for more mon­ey for weapons sys­tems or oth­er prod­ucts with­out improve­ment in the acqui­si­tions mon­i­tor­ing process. As an exam­ple, he not­ed that depart­ment offi­cials had to tell Con­gress last year that F‑35 Joint Strike Fight­er costs bal­looned from a $50 mil­lion per air­craft esti­mate in 2002 to $93 mil­lion per aircraft. 

Depart­ment offi­cials began work­ing with con­trac­tors to bring down the costs of the F‑35 and oth­er weapons sys­tems, Carter said, either by chang­ing designs with­out com­pro­mis­ing capa­bil­i­ties, or by sign­ing mul­ti-year con­tracts. The ser­vices have been able to real­lo­cate $580 mil­lion in sav­ings through con­trac­tor redesigns, he said, and recent­ly saved $600 mil­lion in acquir­ing the FA-18 air­craft by sign­ing a mul­ti-year contract. 

Carter said depart­ment offi­cials real­ized sav­ings last year by can­celling pro­grams that either had­n’t per­formed or had become obsolete. 

With the new effi­cien­cies ini­tia­tive, he said, it’s imper­a­tive for the depart­ment to “find sav­ings in pro­grams we do need.” 

Under the plan, Carter said, offi­cials will strive for “pro­duc­tiv­i­ty growth” – a busi­ness term mean­ing to do more with­out more – and con­sid­er what prod­ucts and ser­vices should cost, rather than accept­ing what con­trac­tors say they will cost. 

Gates also has direct­ed that there be real com­pe­ti­tion for con­tracts. And much of that can be done, Carter said, through bet­ter process­es in the department’s acqui­si­tions office. In fact, he said, $55 bil­lion in con­tracts last year were found to have received only one bid, usu­al­ly by the incum­bent con­trac­tor. Even two bids per con­tract are not enough, he said. 

“Com­pe­ti­tion is the sin­gle, most pow­er­ful tool to dri­ve pro­duc­tiv­i­ty,” Carter said. “We must stop delud­ing our­selves that two bids is real competition.” 

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

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