Magazine article National Defense

Pentagon Hits a Few Bumps on Road to Efficiency

Magazine article National Defense

Pentagon Hits a Few Bumps on Road to Efficiency

Article excerpt

The coming infusion of fresh money into the Pentagon's budget has many senior officials breathing a sigh of relief. Others, meanwhile, fear the funding upturn may dampen the motivation that is needed to make the Pentagon a more efficient operation.

Senior defense officials stress there is a compelling need to push forward "acquisition reform." That is a catch-all phrase encompassing efforts to simplify the Defense Department's purchasing methods and bring them more into line with commercial practices.

Among the most formidable obstacles that have stood in the way of simplifying defense acquisitions are so-called "cultural problems." Despite high-profile advocacy from the top echelons of the Pentagon leadership, procurement reform is often not trickling down to the entire work force. And there is still a disconnect between the Pentagon and its contractors that has created confusion within industry. Many frustrated contractors are not sure about what their customer expects from them.

A case in point is the use of "best value" to select contractors. Sometimes, "the government says contracts are best-value but they are clearly price-based," averred John H. Moellering, president and chief executive officer of Lear Siegler Services Inc.

Criteria such as best value create confusion because they are vaguely defined. "Best value means different things to different procurement people," asserts Thomas A. Corcoran, president and chief operating officer of Lockheed Martin's space division.

Moellering and Corcoran shared a discussion panel during a recent industry symposium sponsored by the American Institute of Aeronautics and Astronautics in Arlington (AIAA), Virginia.

When budgets are shrinking, government program managers have a clear motivation to run their shops more efficiently. They either must cut costs or jeopardize the survival of the program. But now that budgets are growing, some officials dread the prospect that "people will relax" and stop pursuing acquisition reform as aggressively as they should. This fear was recently expressed by Defense Undersecretary for Acquisition and Technology Jacques S. Gansler during the AIM conference.

"There is no guarantee that funds will increase in the future," he said. So it is "essential to keep up the momentum" in acquisition reform.

Attempts by the Defense Department to become more efficient led to innovations such as Internet-based contracting and the elimination of cumbersome military specification for items that are commercial in nature. But the credibility of these efforts was undermined during past budget deliberations with Congress, when the Pentagon often was chided for building a budget with assumed savings-which meant that if the efficiencies didn't pan out, the result would be a funding shortfall.

In the budget just submitted to Congress for Fiscal Year 2000, defense officials claim there are no phantom savings.

"We haven't put wedges in for things like paperless contracting and acquisition reform," said a senior budget official during a Pentagon news conference. "We're trying to get away from just taking money away from people and hoping that the savings appear. We've tried to set up an incentive so that each of the individual services and the other components have an incentive to pursue acquisition reform."

The upshot, he explained, is that "any savings they generate don't come back to us, they come to finance their program. …

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