A Clever Approach To Solve DoD’s Sequestration Problem

Recently, the Lexington Institute published an analysis by a senior aerospace official of ways to reduce excess spending in defense. This analysis strongly suggests that it would be possible for the Department of Defense to find savings equal to that which will be imposed by sequestration on the Pentagon beginning January 2, 2013 without changing the defense strategy, cutting programs or reducing readiness. What is required is reforming DoD’s dysfunctional acquisition system which the study describes so well:

“Requirements are out of hand. Oppressive administrative and regulatory burdens, poor public/private-sector relationships, failure to accurately account for costs, failure to leverage the power of multiyear/block buys and use of incremental funding mechanisms, and Congressional interference tremendously increase the cost of defense without contributing to the strategic posture or capability.”

Current efforts to reform the system, spearheaded by Deputy Defense Secretary Ashton Carter are likely to produce, at best, modest cost savings. The reason for this is that they don’t change the system, they simply provide more of the same: more bureaucracy, more regulations, more oversight, more demands for data (including commercial IP) and more government interference with the natural flow of business.

The study’s author points to a number of areas where reducing government interference, creating opportunities for greater competition and applying well-proven principles and practices from the private sector could save tens of billions of dollars. For example, allowing the private sector to compete for more non-inherently governmental work could save up to $11 billion a year just in defense spending. Another $11 billion could be saved by reducing the burden on defense industries of unique but unnecessary regulations. Three to four billion could be saved annually by applying proven methods for doing supply chain management and inventory forecasting. Better contracting and using acquisition strategies that maximize the potential for savings could easily cut acquisition costs by $10 billion or more. These measures and others proposed in the study could produce around $50 billion a year in savings, approximately the amount that will be cut from the FY2013 budget by sequestration.

This is an important, thoughtfully and extremely well referenced study. It should be required reading throughout the defense acquisition community.