USA — Carter Promotes Pentagon Procurement Efficiency

WASHINGTON — The Defense Depart­ment must become more effi­cient in pro­vid­ing the mil­i­tary capa­bil­i­ties the nation needs, a senior Pen­ta­gon offi­cial said here yes­ter­day.

At a Pen­ta­gon news con­fer­ence, Ash­ton B. Carter, under­sec­re­tary of defense for acqui­si­tion, tech­nol­o­gy and logis­tics, out­lined steps the depart­ment is tak­ing to achieve effi­cien­cies need­ed to save $100 bil­lion over five years begin­ning in fis­cal 2012.

The Defense Depart­ment must have 2 to 3 per­cent annu­al growth to sup­port con­tin­ued robust warfight­ing capa­bil­i­ties, Carter said. Under­stand­ing that a cer­tain amount of growth is need­ed, he added, Pres­i­dent Barack Obama’s defense bud­get pro­pos­al calls for 1 per­cent real growth each year at a time when the fund­ing curve for all oth­er fed­er­al agen­cies has flat­tened. This, Carter explained, leaves the remain­ing 1 to 2 per­cent of nec­es­sary real growth for the depart­ment to come from effi­cien­cies.

The depart­ment must iden­ti­fy and elim­i­nate unpro­duc­tive or low-val­ue-added over­head and trans­fer the sav­ings obtained to warfight­ing capa­bil­i­ties – “in effect, doing more with­out more,” Carter said.

The defense bud­get is more than $700 bil­lion, Carter said, but the focus of the ini­tia­tive is on the $400 bil­lion that is con­tract­ed out for goods and ser­vices.

The objec­tive is to deliv­er the warfight­ing capa­bil­i­ties need­ed for the mon­ey avail­able, Carter said, by get­ting bet­ter buy­ing pow­er for warfight­ers and tax­pay­ers. The poli­cies aim to restore afford­abil­i­ty in defense pro­cure­ment and to improve defense indus­try pro­duc­tiv­i­ty, he added.

The effi­cien­cies Carter is seek­ing come from what econ­o­mists call pro­duc­tiv­i­ty growth. “That’s what we’re look­ing for,” he said. “In the rest of the econ­o­my, we expect this — you get a bet­ter com­put­er every year, and cheap­er. But we haven’t seen pro­duc­tiv­i­ty growth in the defense econ­o­my. More has been cost­ing more, and we need to reverse that trend and restore afford­abil­i­ty to our pro­grams.”

Carter said he will issue guid­ance to ensure con­tract­ing offi­cers are using the prop­er con­tract types to give the tax­pay­er buy­ing pow­er. “An exam­ple would be using a fixed-priced con­tract for devel­op­ment of the KC‑X tanker, which we’re doing,” he said. “This sta­bi­lizes design and enhances the val­ue of com­pe­ti­tion.”

Carter said the fund­ing spig­ots were turned on after the Sept. 11, 2001, ter­ror­ist attacks on the Unit­ed States, and some inef­fi­cien­cy crept into pro­cure­ment prac­tices.

“That’s why we’re set­ting an annu­al goal of 2 to 3 per­cent, which accu­mu­lates over the com­ing years,” he said. “But there will be spe­cif­ic tar­gets for going down and get­ting lean­er in these dif­fer­ent cat­e­gories.”

Carter said the efforts are need­ed, and they’re need­ed quick­ly. He not­ed that he had spo­ken with acqui­si­tion experts and the chief exec­u­tive offi­cers of many defense com­pa­nies ear­li­er in the day.

“First of all, every­body knows that we’re enter­ing a new era, that we’re at an inflec­tion point, and that there­fore we need to adapt our man­age­ment prac­tices to that real­i­ty — play the game that’s on the field,” he said. “Sec­ond­ly, they can do the math, which is that we’re going to enjoy some real growth in defense spend­ing, but not the kind that we’ve enjoyed over the last decade.”

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