Pentagon banks on teamwork to meet Gates mandate

The Pentagon has commissioned five teams of defense officials and experts to take on different aspects of realizing plans to cut the Defense Department budget by $100 million in the next five years, according to the Malcolm O'Neill, the Army’s top acquisition official.

The teams will tackle affordability, incentives, contract terms, metrics and service contracts to help implement the proposals outlined by Defense Secretary Robert Gates this summer.

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“We estimate we can probably save 2 to 3 percent of the DOD budget every year,” said O’Neill, assistant secretary of the Army for acquisition, logistics and technology, reported Kate Brannen at Defense News.

The contracting focus stems from the $400 billion – out of the $700 billion Pentagon budget – spent on contracts for goods and services, the report said.

Additionally, the Army spends 58 percent of its $585 billion in active contracts on service contracts, Lt. Gen. William Phillips, military deputy to O’Neill, said at a Baltimore military conference on Aug. 25.

O’Neill, who was part of a group that met with Pentagon acquisition chief Ashton Carter on Aug. 29 to work on the plans, predicted that industry will see an increase in fixed-price/incentive-fee contracting. “We don’t use that enough,” O’Neill said.

Carter, who is the undersecretary of defense for Acquisition, Technology and Logistics, also is urging the services to focus on affordability by using targets and milestones, according to Defense News.

The aim at contracting as means for trimming fat from the defense budget isn’t a surprise, industry experts said.

“We’re going to see a continued shift away from time-and-materials contracts, where it’s a contracting body in place of a government body,” said Warren Suss, president of Suss Consulting. “That’s going to allow the contractor community to establish their own measures to meet government standards.”

Although the focus is on reducing costs, O’Neill said the Pentagon and the Army are looking to follow recommendations made in a 2007 report by former Undersecretary of Defense for Acquisition, Technology and Logistics Dr. Jacques Gansler, which called for more experts in contracting and acquisition. O’Neill echoed the importance of that type of expertise but reportedly told Carter that he will make cuts if he sees unnecessary redundancy in jobs or functions.