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Carter Promotes Pentagon Procurement Efficiency

By on Friday, July 2nd, 2010

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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.”

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