The Department of Defense is looking to tighten its belt on department spending, a decrease of about $100 billion over the next five fiscal years.
Ashton B. Carter, under secretary of defense for acquisition, held a meeting yesterday with government contractors and lobbyists at the Pentagon to discuss how the industry could cut waste to free up money in the department's budgets.
Senior executives from some of the largest defense contractors, such as Lockheed Martin, Boeing and BAE Systems, were present at the meeting and were urged by Carter to bring down overhead costs and use fixed-price contracts. Carter told the industry leaders to think about “identifying and eliminating unproductive or low-value-added overhead and transferring the savings obtained to war fighting capabilities.“
The main message: “doing more without more.”
Carter explained these savings will be used to support personnel, military units and future war-fighting capabilities, and announced his plan to release a draft of possible guidelines for the industry to follow to try respond to the department’s request. He explained it was not the department's intent to cut into the companies' profits, but rather encourage them to be more efficient and increase productivity.
While the defense budget has grown significantly since the Sept. 11 terrorists attacks, the undersecretary told executives this will no longer be the case as their spending will begin to decrease at a modest rate.
“This is neither the '90s nor the last decade,“ he said. “It's different. It's an environment in which we're going to have slow real growth. And our senior managers and our partners in industry need to manage accordingly.“
Carter’s push for the industry to accept the initiative included a series of charts that presented the steps the department is taking to achieve this goal. The charts showed the incentives to industry to increase its productivity and how DoD can adapt its management practices to encourage efficiency.
“Each of those items on the chart will be ones that we’ll be pursuing, and in the pursuit of this 2 to 3 percent net increase in war-fighting capability by removing inefficiencies that have crept into our acquisition of goods and services,” Carter said.
Over the next few weeks, DoD officials will meet with industry executives to come to an agreement on how these measures can be obtained.