Relying on continuing resolutions wasted billions, says Pentagon acquisition chief

The absence of a permanent budget for the first six months of the fiscal year likely cost the Defense Department billions in inefficiencies, according to the Pentagon's top purchasing official.

In a speech on Wednesday at the conservative-leaning Heritage Foundation, Ashton B. Carter, undersecretary of defense for acquisition, technology and logistics, argued that the seven continuing resolutions passed by Congress from October 2010 through the second week of April were highly ineffective and resulted in a waste of taxpayer resources.

"It is uneconomical to proceed in this herky-jerky fashion," Carter said. "It cost billions for us to operate in this way. It's like a hidden tax."

He said the lack of a permanent, fixed budget upset some carefully calibrated buying plans and caused the department to shelve other programs that had yet to commence.

Congress finally passed a fiscal 2011 budget for the last six months of the fiscal year last week.

Carter's address focused on his initiative to milk greater savings and more efficiencies out of the roughly $400 billion the department spends to procure goods and services. The acquisition chief said the era of ever-increasing Defense budgets was gone and that the department needed to do "more without more."

The leaner acquisition environment, he said, will feel very different to those in the Defense community who have "grown accustomed to a circumstance where they can always reach for more money."

While much of Carter's focus was on the $200 billion devoted to the services of acquisition, he also suggested that the department may not be done cancelling or scaling back several expensive major weapons programs.

Carter's office has already abandoned several weapons programs, totaling $300 billion, which were either over-budget or inefficient, or which involved a product of which the department had simply acquired enough. They include the presidential helicopter, the Expeditionary Fighting Vehicle and aspects of the Future Combat System.

And while the Pentagon has plucked most of the low-hanging fruit, "there undoubtedly will be more cancellations of that kind," he said.

The alternative to not addressing these problems, Carter said, is more broken programs, ineffective products provided to the warfighter and eroded taxpayer confidence in the department's ability to wisely spend money.

Repeating themes from many previous speeches on this subject, Carter outlined his 23-point plan to drive more efficiencies and savings out of an essentially flat Defense acquisition budget. The plan includes introducing more competition, reducing bureaucracy and unnecessary paperwork, improving the tradecraft of service acquisition, building up the procurement workforce and incentivizing better productivity from industry.

Carter added that the department plans to roll out a new Superior Supply Incentive Program in the coming months that will reward the best performers in the Defense industry with advantages in source selection, performance payments and nonmaterial recognition. The program is modeled after a plan originally scheduled to be introduced by the Navy but which Carter is expanding departmentwide.

"We are trying to reduce cost and not profit," Carter said. "We use profit as an incentive to reduce cost."

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