Reforms of the way the Pentagon makes major purchases are reducing the cost overruns which traditionally bedeviled big military acquisition programs, without hurting the bottom lines of defense contractors, a senior Pentagon official said this week.
Speaking at the Center for Strategic and International Studies, Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall outlined the ways the Better Buying Power 3.0 initiative has improved the efficiency and cost integrity of Defense Department big-ticket purchases.
“We’re controlling costs without lowering margins, basically,” Kendall said.
“We want people to make a reasonable profit so they are attracted to do business with us,” Kendall said Tuesday. “Profits have done reasonably well for industry, and [savings] have not been done at the expense of industry.”
Introduced in 2010, the BBP initiative emphasizes fundamental acquisition principles and encourages responsible spending. It’s currently in its third version, which focuses more on “innovation, technical excellence, and the quality of our products,” according to a report from last year on its implementation.
Kendall showed confidence in DoD’s approach to acquisition — saying the data supports it. More programs are coming out cheaper than expected, he said.
With BBP and other reforms, DOD lowered the average cost growth for Defense acquisition programs from about 9 percent in 2012, to about 4 percent in 2014, while company contracts have also generally been shorter, he said.
During his speech, Kendall also detailed 10 principals behind Better Buying Power. He stressed that competition is the most important incentive and emphasized the importance of critical thinking and professionalism.
“Behind all the Better Buying Power Initiatives, one way or another, is that data should drive policy,” Kendall said. “We shouldn’t try something because we don’t like what’s going on right now…and just grab at something [else] because it’s better.”
Kendall also mentioned he let go of a legislative proposal that would give him more oversight of defense-focused acquisitions and mergers. After receiving feedback from other agencies, he said it was no longer necessary.
Kendall closed out his speech by simplifying acquisition reform down to four basic elements: setting reasonable goals, putting professionals in charge, and giving them the resources they need, and providing strong incentives to succeed.
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