The current budgetary environment makes it more important that DoD gain control of its acquisition system, according to Ashton B. Carter, Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L). Testifying before the House Appropriations Defense Subcommittee last week, Carter said that DoD’s acquisition systems too often has been “too slow, too costly, and at times too careless with taxpayers’ dollars.” He told members that Secretary Gates directed him to move aggressively to change defense acquisition management so that needed capabilities can be developed and delivered on time and at a lower cost. He reported that the department has made significant progress in its efforts.
Carter told the subcommittee that Secretary Gates has already made difficult decisions to terminate and restructure programs that were not meeting capability goals, were not affordable, or were not necessary. And, he implied, future programs that do not meet standards in the future will undergo similar evaluation.
Future success in controlling costs and developing and fielding successful acquisition programs will depend on better acquisition planning and budgeting, cost estimating, and contracting strategies, Carter said. “Going forward, cost savings in our acquisition portfolio will be achieved primarily by building affordability into programs at the start, by driving down costs on major weapon systems in production, and through competition,” he said.
He said the Services and Defense Agencies have been directed to treat affordability as a requirement for all milestone decision points. “Understanding and controlling future costs from a program’s inception is critical to achieving affordability requirements” Carter told the committee. He cited the Future Ballistic Missile Submarine (SSBN-X), the Ground Combat Vehicle (GCV), and the Family of Systems for Long Range Strike as systems that the military services have been reworking to engineer affordability early on in the acquisition process.
Carter said a key to efforts to control overhead and production costs of programs in production was to “manage according to what programs Should Cost, not according to what they Will Cost.” He has instructed DoD’s acquisition staff to provide Should Cost estimates at each milestone decision and to use these estimates in contract negotiations and to determine contract incentives. He cited efforts using this method to lower costs for the F-35 (Joint Strike Fighter) and Global Hawk programs.
Real competition between “capable competitors” is one area that has proven to yield consistent savings, Carter told the subcommittee. He described the department’s drive to promote real competition, which he said “is the single most powerful tool the Department has to drive productivity.” And, he stated, “directed buys” from two selected suppliers is not necessarily real competition. He pointed out that reducing the use of directed buys for the Littoral Combat Ship (LCS) in favor of real competition is expected to produce $1 billion in savings over the next five years. He acknowledged that competition is not always possible, but said all programs now have to prepare a competition strategy to ensure that potential competitions are considered.
The initiative to revitalize the acquisition workforce introduced by Secretary Gates is “central to improving outcomes in the defense acquisition system,” Carter said. He asked the Subcommittee to support the $734.1 million proposed in FY2012 for the Defense Acquisition Workforce Fund (DAWF). The DAWF will allow DoD to continue its acquisition workforce improvement strategy to hire 10,000 acquisition civilians by 2015. According to Carter, to date 4,200 have been hired under the strategy.