Navy secretary outlines how he'll reduce weapons costs

Defense Department

Navy Secretary Ray Mabus on Wednesday revealed what he called his "five governing principles for acquisition excellence" that focus heavily on reducing the cost of weapons by tightly controlling what capabilities the Navy and Marine Corps seek and moving more programs to fixed-price contracts.

In a speech to the Navy League's annual exposition at the National Harbor Convention Center in Maryland, Mabus mixed criticism of the defense industry for its abuses and mistakes with pledges to work with companies to sustain the industrial base and to reward good performance in the future.

Mabus' speech to an audience of defense contractors, service personnel and Navy-Marine supporters reflected the increasing emphasis by Congress and Defense Secretary Robert Gates on acquisition reform. It also may have been influenced by Gates' warning to the same audience Monday that the naval services could not afford the weapons they want at the soaring cost of new systems.

To reduce the cost of procurement, Mabus said, the naval services must clearly identify the requirements for new systems, "raise the bar" on performance by government officials and industry, rebuild the acquisition work force that was cut sharply by previous congressionally imposed acquisition reforms, sustain the industrial base and "make every dollar count."

There was no choice. "We have to do all that to succeed in the difficult fiscal environment" expected in the future, Mabus said.

In discussing the need for tighter review of requirements, Mabus cited the emerging SSBN(X) program to replace the Ohio class ballistic missile submarines. Gates warned Monday that the Navy could not afford the SSBN(X) at the estimated price of $7 billion each.

In addition to curbing its appetite for expensive capabilities, the Navy Department had to improve its management of procurement and replace the acquisition professionals it was forced to cut under past reform measures, Mabus said.

He also pointed the finger at industry for poor performance. Raising the bar means that "on-time and on-budget is a baseline standard," not an example of excellence, he said.

Mabus said he would attempt to increase the use of fixed-price contracts from about one-third today to at least half, reserving cost-plus agreements for risky development projects.

In the cost-plus deals, "we get to pay for the poor work of others. ... As secretary of the Navy and a taxpayer, I don't think we should have to pay for those mistakes."

And, he said, "I'm not going to hesitate to cancel poorly performing programs."

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