Pentagon cost-cutting efforts touch on procurement

Senior Pentagon officials announced plans Monday to scour the Defense Department's procurement accounts to eke out 2-3 percent savings annually to cover the military's more urgent needs.

The plan is part of a broader effort within the Pentagon to cut more than $100 billion in costs over the next five years and redirect that money to higher-priority items in the defense budget, whose growth is slowing after a decade of historic increases.

Acquisition chief Ashton Carter, speaking at a news briefing, said the Pentagon was "in effect doing more without more" as the military prepares for an era of modest budget growth.

But Carter, who spoke with industry leaders and defense acquisition officials on Monday, said both the Defense Department and defense industry could run their operations in a more cost-efficient manner. He said it is plausible that inefficiencies have crept into Pentagon programs during a decade in which the miltiary's base budget nearly doubled.

"I would say to anyone who is hesitant about embarking on this path that they need to consider the alternative," which includes poorly performing weapons programs, an erosion of taxpayers' confidence and a loss of military capability, Carter said.

Defense Secretary Robert Gates, who last month launched the effort to cut fat from the Pentagon budget, said Carter's initiative, which includes contracts for both weapons systems and services, "will take time, but I'm confident will succeed."

Carter said his plan complements continuing efforts to overhaul the Pentagon's acquisition system. But he stressed that the cost-cutting initiative is focused on specific outcomes, not bureaucratic processes.

As the Pentagon looks for savings in the acquisition budget, officials will review whether weapons systems are being produced efficiently, whether contractors are incentivized to control costs, and whether the military is controlling the costs of its requirements, which can often drive up the price of weapons systems.

For weapons systems now in research and development, "we need to make sure affordability and not just appetite are designed in from the start," Carter said.

Carter said he will continue to meet with acquisition officials and defense firms over the next several weeks before issuing more specific guidance on how the savings should be achieved.

The Aerospace Industries Association, which represents many of the defense industry's biggest players, released a statement supporting the Pentagon's efforts.

AIA officials said they "look forward to working with the administration over the next several months to develop the required facts and data and advance the dialogue through a series of meetings that will be necessary to achieve our common goals."