This week Secretary Gates announced a new “Efficiencies Initiative” to improve defense acquisition and contracting.  This initiative contains the first announced details of what Secretary Gates had in mind last month when he called for changes to achieve $100 billion in savings over the next five years (see Highlights, August 10, 2010).  They are the result of work performed by a team led by the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) Ashton Carter that developed guidance containing some 23 separate changes in the way DoD does business.  These changes cover a wide range of acquisition management and contracting areas such as program management, cost estimating, competition, contract types, and the role of small business.  At a news conference, Secretary Gates outlined his goals and discussed some of the major initiatives.  In a move to address the ongoing criticism from congress and defense analysts that the current defense long-term program is not affordable, the Secretary said he will now require program managers to set affordability funding and performance targets.  Once set, these targets could not be changed without express approval of the USD (AT&L).  By setting these targets, Gates said “Managers will ensure that a program’s initial design is constrained by its ultimate schedule and cost.”  His goal is to avoid cutting capabilities to pay for programs that later on are judged to be unaffordable and then cancelled after consuming large amounts of budgetary resources.  Secretary Gates also announced that programs would be required to estimate total costs under existing plans and estimate costs that could be expected if programs were managed more efficiently and hit their cost objectives.  He believes that this will lead to increased productivity and innovation and better performance both in DoD and industry.  The Secretary pointed out that DOD will “increase the use of contracts in which benefits or productivity and the cost of overruns are shared by contractors and the department.”  He cited the Joint Strike Fighter as a program that will benefit from this approach.  Under the new guidance, the services will be given new direction regarding the increased use of competition.  Gates said he will direct them to remove obstacles to competition during the bidding process and require program managers to develop a competition strategy at each program milestone.  He said he understands that implementing these initiatives will take time, but that he expects monthly reports on progress and established metrics against which this progress can be measured.  Memoranda sent to all acquisition professionals enumerate and explain the details of all the initiatives.