The Pentagon is struggling to cut costs and make its acquisition process faster and more affordable, but faces budget cuts and potential sequestration that would strip $500 billion in across-the-board defense cuts in January.
Sequestration is a “horrible” way to take money out of the budget, Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall said yesterday at a Pentagon briefing on the second iteration of Better Buying Power (BBP). “It flies in the face of everything we’re trying to do here,” he added. And cuts in general “tend to drive you to inefficiencies.”
Kendall and Deputy Secretary of Defense Ashton Carter–who announced the original Better Buying Power (BBP) 1.0 efficiency initiative in 2010–discussed the next steps in how the Defense Department could “do more without more.”
In itself, BBP 1.0 came after then-Defense Secretary Robert Gates said in a speech that the budget “gusher” was turned off, and would be unlikely to be turned on again for some time.
The next phase for BBP 2.0 after yesterday’s discussion is to draft amplifying guidance for action in January, Kendall said.
Carter pointed to successes from this BBP 1.0 effort, to include listing Navy cost cutting for the Ohio class submarine replacement, Littoral Combat Ship program with “dramatically” lower costs that will sustain competition going forward, and recently receiving an award for saving almost $300 million in the guided-missile destroyer program.
This Better Buying Power 2.0 effort comes after learning from experience in implementing the first round of effort, industry ideas and data collected since the initiative got under way.
There are no easy solutions, Kendall said, just hard work, and the 23 initiatives of BBP 1.0 have now expanded into 36 for BBP 2.0.
New to the list, and “central to success,” is a professional acquisition workforce, he said. There is “no more important legacy” than to leave behind a stronger workforce “We can do better if we have a deeper bench.” The Defense Department is different than industry in that it nurtures its own program managers, and other acquisition personnel. If there’s a shortfall, there’s a very long recovery period.
Other items on the newly-announced list are such things as controlling costs during program execution, cost caps, removing redundancy, and putting in place a system to measure cost performance as urged by Congress. Such a system takes a few years to gather data on program performance and institutional performance, which allows insight and understanding into how to make acquisition more efficient, Kendall said.
Additionally, continued close partnerships from the requirements process on up through the program’s lifecycle are vital, he said.
Other areas for increased effort include assuring the correct type of contract is used for the specific acquisition, and aligning incentives for industry to perform on a program.
More attention must be paid by the government to specifically defining what value really is, wanting not the lowest cost necessarily but the best price.
The government must consider how to identify and perhaps reward superior suppliers. The Navy, Kendall said, is looking at setting up a pilot project to do this.
One acquisition program that has been troubled is the Lockheed Martin [LMT] F-35. Kendall said he was “surprised,” Friday to hear that Marillyn Hewson was named to take over Jan. 1 as CEO in place of Chris Kubasik who was fired for ethical reasons…(she) “has a reputation as a capable professional. I’m looking forward to working with her.”
“I think Lockheed has dealt with the situation appropriately as an internal Lockheed matter,” he said.
The F-35 program has been has been troubled by cost overruns and schedule delays, and Kendall in February called the program production, “malpractice” (Defense Daily, Feb. 7).