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Budget cuts demand more DOD buying power
Posted 4/20/2011
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by Donna Miles
American Forces Press Service
4/20/2011 - WASHINGTON (AFNS) -- As Defense Department officials seek additional cost cuts to support President Barack Obama's deficit-reduction efforts, weapons systems and other major procurement programs certainly will be on the table, but won't be enough to achieve the president's goals, the Pentagon's acquisitions chief said April 20.
DOD officials also must identify efficiencies in the $400 billion it spends each year on contracted goods and services and find ways to increase its buying power, Ashton B. Carter, the undersecretary of defense for acquisition, technology and logistics, told a Heritage Foundation audience.
Defense Secretary Robert M. Gates has acknowledged that the Defense Department can't be immune from the national security budget reductions the president has called for, Mr. Carter said. As DOD officials prepare to launch a comprehensive review of the impact of those reductions in fiscal 2013 and beyond, Carter said, it's already clear that the days of "ever-increasing budgets of the post-9/11 decade" are gone.
"Whatever the budget levels are, this will feel very different to a group of government and industry managers and congressional overseers who have grown accustomed to a circumstance where they could always reach for more money when they encountered a managerial or technical problem or a difficult choice," he said.
And more than ever before, it's clear that everyone -- from the president to the defense secretary to the taxpayer -- expects DOD officials to make every dollar it gets count.
"In short, they want better value for the defense dollar," Mr. Carter said. "This is what the country should expect, no matter what size the defense budget is."
DOD officials already have made big strides in improving efficiency, he noted. Over the last couple of years, the department has cancelled more than $300 billion in acquisition programs -- some that were under performing, some that had become too costly and some for capabilities DOD already had.
"We are getting to the point where most of the programs we now have under way or which are getting under way are military capabilities we do need and do want," Mr. Carter said, "and (we need) to get them for the money the country can afford to give us."
Additional acquisition programs are likely to get the ax as the department seeks additional ways to cut costs, Mr. Carter said. And although DOD will continue to initiate new, needed programs, he said, it won't do so without a close eye on the bottom line.
"We aren't going to start anything we can't prove to ourselves will be affordable in the time frame it will be bought," he said.
Mr. Carter used the example of the Ohio-class replacement missile submarine, now in the design stage and expected to be built between 2020 and 2030. The first design projected a unit cost of $7 billion per sub -- causing the department to send it back to the drawing board to find changes that would bring down the cost without compromising critical capabilities.
"We are not going to start something that is so obviously not going to happen," Mr. Carter said.
The same scrutiny is going into the Air Force's new long-range strategic strike bomber, the Army's ground combat vehicle and the Marine Corps' presidential helicopter, he added.
While eyeing acquisition savings, Mr. Carter emphasized that weapons systems procurement represents about $100 billion -- or one-seventh -- of the defense budget. And of that, about 70 percent goes to sustaining systems that already have been procured. So as DOD officials seek ways to cut costs, he said, it's impossible to ignore the $400 billion DOD spends each year on contracted goods and services.
"We need to take a comprehensive look at our spending, including, but not limited to acquisition programs," he said. "And that is exactly what better buying power does."
A 23-point road map already being implemented seeks to improve that buying power, Mr. Carter said. It targets affordability and cost controls, gives industry incentives to be more productive and innovative, and promotes real competition. In addition, he said, it aims to improve the way the department does business, improving tradecraft in how it buys services and cutting through nonproductive processes and bureaucracy.
"The alternative is broken programs, cancelled programs, budget turbulence, uncertainty, erosion of the taxpayers' confidence that their tax dollar is well spent and, of course, ultimately and most damaging, foregone capability to the warfighter," Mr. Carter said.
In looking toward the future, Mr. Carter cited the fiscal 2011 budget as an example of how DOD can't continue to do business. The impact of continuing resolutions and a barely averted government shutdown caused what he called "not just inefficiency, but anti-efficiency" within the department.
"Each and every program manager in the department has had to upset carefully calibrated plans, stop or slow activities only to restart them later, defer the commencement of important new programs and so forth," he said. "And the result of this is not only delay, it is inefficiency. It is an uneconomical way to proceed in this herky-jerky fashion with all of our programs, procurements and activities.
"I don't know how much this has cost us -- (perhaps) billions -- to operate in this way," he said. "It adds a dollop of cost overhead to everything we are doing. It is like a hidden tax."
As he focuses on budgets, Mr. Carter said, his "Job 1" always is fixed on supporting troops involved in current operations.
"That is an area where efficiency comes in, too, but effectiveness is most of the challenge," he said. "It is a daily challenge ... to make sure that the needs of those warfighters are met very rapidly. This means understanding what they need, figuring out what to do about it [and] getting funding."
It's critical, he said, that DOD and Congress develop more responsive "fast lane" processes that don't "steal time from the warfighter."
Mr. Carter expressed little patience with inefficiencies and red tape that bog down that support.
"It's April now in Afghanistan," he said. "And every day that something is sitting in some guy's inbox (or) some contract audit hasn't been accomplished, is a day stolen from the fight. And that is outrageous and unreasonable that we allow that to happen, and we just can't let it happen."
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