Pentagon looks for 100 billion in cost savings
Tuesday, June 29, 2010
Pentagon officials said Monday that they plan to try to cut as much as $100 billion over the next five years out of the billions of dollars spent annually in buying weapons systems and other services from outside contractors.
The Pentagon spends about $700 billion a year on defense -- $300 billion of which goes toward salaries and benefits for military and civilian employees. The rest is for weapons, including airplanes and ships, and for service contracts to keep computers running and facilities maintained.
Defense Secretary Robert M. Gates said he wants contracts scrutinized more closely for inefficiencies and unneeded overhead. He said the savings could be shifted to support U.S. troops around the globe. Pentagon officials said they're looking for annual savings in the $400 billion spent on goods and services.
Gates said the effort is part of his plans in "reforming the way the Pentagon does business." He said he has asked Pentagon officials over the past month to "take a hard, unsparing look at how the department is staffed, organized and operated. . . . As a matter of principle and political reality we must do everything possible to make every taxpayer dollar count," he said.
Ashton Carter, the Pentagon's chief weapons buyer, met with major defense contracting executives Monday to discuss the new proposals. Many of the executives saw their sales rise with the Pentagon's increased spending in the past few years with the wars in Afghanistan and Iraq. But defense budgets are expected to grow more slowly in coming years.
Over the past few decades, the number of government employees overseeing contracting has shrunk as defense budgets have rapidly grown. That led to little oversight on the costs of weapons systems, industry experts say. The Obama administration has pushed for hiring more contracting experts to help improve the acquisition process.
Gates dropped plans for a new long-range bomber and fired the head of the F-35 fighter jet program after the costs skyrocketed.
"The savings we are seeking will not be found overnight," Carter said. "It has taken years for excessive costs and unproductive overhead to creep into our business processes, and it will take years to work them out."