Magazine article National Defense

Defense Department Services Annual Spending to Reach $94B by 2020

Magazine article National Defense

Defense Department Services Annual Spending to Reach $94B by 2020

Article excerpt

The market for defense services and support is expected to brow from $62 billion to $94 billion by 2020, according to a forecast released by the Government Electronics and Information Technology Association (GEIA).

The report, which projects a 4 percent compound annual growth rate, says military health care, training and base operations will receive the largest increases. The services and support market also includes funding for administration; test and evaluation; logistics, maintenance and depots; information services and operations.

There are obstacles, however, that may stand in the way of such an increase, said Stan Soloway, deputy undersecretary of defense for acquisition reform.

The Defense Department is facing a procurement budget shortfall, Soloway told a recent GEIA gathering, in Arlington, Va. 'What's become increasingly evident, and I hope clear to all the folks in our department, is that the $60 billion procurement level that we set several years ago is far from adequate," he said.

"We are looking at an enormous budget shortfall over the next several years."

Soloway said the budget deficiency may range anywhere from $10 billion a year to what some believe to be $180 billion during the next five to seven years.

Soloway outlined several areas that the Defense Department should focus on, such as contractor performance, outsourcing and privatization, and training and education, he said.

Regarding Pentagon contractors, he said, "We are still so hung up on profit, rather than performance, that it is continuing to inhibit our ability to access truly commercial solutions and commercial providers."

He said the Pentagon is too concerned with contractor profit margins. "My view is, why do I care" how much profit contractors are earning, if the Defense Department in return is receiving high quality products?

Contractors should not only provide sound systems, said Soloway, but they also should "drive prices down, increase service and [significantly] reduce turnaround times."

Soloway cited his recent visit to the Balkans, where he was able to see, firsthand, members of the commercial sector working directly with the military. He called this "an example where people who have had, in the past, absolutely no experience or exposure to the commercial sector have now had the experience and begin to [realize] what the possibilities might be."

Another controversy facing the department involves outsourcing and privatization, said Soloway. A76, the process by which government contracts are competed between the public and private sectors, has become a nuisance to several of the Pentagon's top contractors, he said. …

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