USA — Carter Outlines Plan to Help Warfighters, Taxpayers

WASHINGTON, Sept. 14, 2010 — The Defense Department’s $400 bil­lion-a-year sys­tem for buy­ing goods and ser­vices is about to under­go major changes designed to save tax­pay­er mon­ey with­out affect­ing mis­sion readi­ness, a senior Pen­ta­gon offi­cial said today.

“We’re ask­ing you to do more with­out more,” Ash­ton B. Carter, under­sec­re­tary of defense for acqui­si­tion, tech­nol­o­gy and logis­tics, said in a memo to his senior acqui­si­tions staff released today.

Carter lat­er out­lined the plan at a news con­fer­ence with Pen­ta­gon reporters. It con­tains 23 areas of improve­ment to make the department’s pro­cure­ment offices and defense con­trac­tors more effi­cient.

The pro­cure­ment changes are the first detailed announce­ment as part of Defense Sec­re­tary Robert M. Gates’ ini­tia­tive, announced last month, to save $100 bil­lion over the next five years with­out neg­a­tive­ly affect­ing warfight­ers.

Under the changes, the depart­ment is to man­date afford­abil­i­ty in con­tracts and con­trol cost growth. No longer will major weapons sys­tems have to be can­celled after years in the mak­ing and bil­lions of dol­lars in cost over­runs have been spent, Gates said speak­ing before Carter at the news con­fer­ence.

Pro­cure­ment offi­cers will con­sid­er not only what goods and ser­vices cost, but what they should cost, Carter explained. An exam­ple is the F-35 Light­ning II joint strike fight­er, for which the cost esti­mate bal­looned from $50 mil­lion in 2002 to $93 mil­lion this year, he said. The con­trac­tor lat­er agreed to absorb some costs.

The SSBNX bal­lis­tic sub­ma­rine, the long-range strike sys­tem, the Army’s Ground Com­bat Sys­tem, and the Marine Corps pres­i­den­tial heli­copter all are exam­ples of sys­tems that are being pro­cured under the new rules, at a cost of about $200 bil­lion, he said.

Carter used the sub­ma­rine as an exam­ple of the pos­si­bil­i­ty of sig­nif­i­cant cost sav­ings, say­ing the new sub’s price dropped from $7 bil­lion to $5 bil­lion after offi­cials reduced the scope of the design – some­thing he said engi­neers must do on the front end of projects.

The new sys­tem will reward com­pa­nies that con­sis­tent­ly deliv­er afford­able sys­tems on time, and those that share in any nec­es­sary cost over­runs, he said.

Con­trac­tors will now have to pro­duce sys­tems in a spec­i­fied and short­er time than has been allowed, Carter said. The con­tract for the F-18 Hor­net fight­er jet, for exam­ple, has been set at five years, allow­ing for bet­ter man­age­ment and over­sight, he said.

“These all the ways you get pro­duc­tiv­i­ty in an indus­tri­al activ­i­ty,” Carter said of the changes.

In oth­er changes, pro­cure­ment offi­cers will:

— Elim­i­nate redun­dan­cy in warfight­er port­fo­lios;

— Give indus­try incen­tives to reduce, rather than increase, costs;

— Put process­es in place to ensure real com­pe­ti­tion;

— Require open-sys­tem archi­tec­ture; and

— Increase the role of small busi­ness­es.

The changes will require par­tic­u­lar atten­tion to con­tract­ed ser­vices, an area that has grown sub­stan­tial­ly over the last 10 years to become a $200 bil­lion annu­al cost to the depart­ment, Carter said. “Half of our costs are for ser­vices, and we’re per­form­ing worse there,” he said. “It’s grown so large, we sim­ply have to man­age it bet­ter.”

The depart­ment also will look inward to its “unpro­duc­tive bureau­crat­ic process­es,” Carter said, that waste time and resources and force unnec­es­sary costs on con­trac­tors. “We can’t leave our­selves out of this,” he said. “We con­tribute to low pro­duc­tiv­i­ty in the indus­try, and we need to step up and take respon­si­bil­i­ty for it.”

Carter called the changes “very rea­son­able goals” that will ensure warfight­ers have what they need. “It’s entire­ly pos­si­ble to find $100 bil­lion [in sav­ings] in the $400 bil­lion we spend every year in con­tract­ing,” he added.

Carter vowed to be “relent­less” in the imple­men­ta­tion of the goals, which he said are very spe­cif­ic and mea­sur­able. He added that he will over­see progress dai­ly and will pro­vide progress reports to Gates month­ly.

“To those who hes­i­tate, to those who fear to go down this path, they need to con­sid­er the alter­na­tive: bro­ken promis­es, can­celled pro­grams, unpre­dictabil­i­ty and uncer­tain­ty that is bad for indus­try, erodes tax­pay­er con­fi­dence, and worst of all, results in lost warfight­er capa­bil­i­ties,” he said.

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

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