Pentagon launches drive to "do more without more"

WASHINGTON Tue Sep 14, 2010 7:55pm EDT

U.S. Secretary of Defense Robert Gates participates in an award ceremony for a group of soldiers from the 1st Battalion, 502nd Infantry Regiment, at Combat Outpost Senjaray, outside Kandahar, September 3, 2010. REUTERS/Jim Watson/Pool

U.S. Secretary of Defense Robert Gates participates in an award ceremony for a group of soldiers from the 1st Battalion, 502nd Infantry Regiment, at Combat Outpost Senjaray, outside Kandahar, September 3, 2010.

Credit: Reuters/Jim Watson/Pool

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WASHINGTON (Reuters) - The Pentagon on Tuesday unveiled 23 rules to end years of massive cost overruns on weapons programs, an overhaul largely backed by industry that could prevent another major battle with Congress.

"This effort is not about reducing the defense top line, but about getting more bang for the buck by shifting resources from overhead to the military capabilities needed today and in the future," Defense Secretary Robert Gates told reporters at a Pentagon briefing.

He said the changes would affect about $400 billion of the Pentagon's total $700 billion budget. The goal, he said, was to make programs more affordable from their inception and avoid messy cancellations.

The changes will help meet Gates' goal to cut $100 billion from the Pentagon's overhead over the next five years to save money for new weapons programs and troops, the Pentagon's top weapons buyer, Ashton Carter, said.

There is strong support for acquisition reform in Congress.

Defense industry executives are anxious about the future given mounting concerns about the yawning U.S. fiscal deficit, but Gates and Carter said the overall defense budget would continue to grow, albeit far more slowly than in recent years.

Instead of the collapse in defense spending seen in the 1990s, the Defense Department expects $200 billion in future programs, including a presidential helicopter, Army combat vehicle, and new long-range strike systems.

Grateful that Gates is fighting for continued real growth in defense spending, defense companies are scrambling to align themselves with his initiative, cutting jobs and selling units to ensure continued profits in a more difficult market.

"We get it," Roger Krone, who heads Boeing Co's space and networks division, told Reuters, noting that Boeing was looking for any cost-saving measures it could find.

Targeting overhead costs could bring some relief to lawmakers, who have rejected some of Gates' bigger program cuts because they do not want to lose high-paying aerospace jobs.

REWARDING EFFICIENCY

Gates and Carter said the changes were aimed at increasing the focus on real competition, cutting Defense Department bureaucracy, accelerating timelines for new programs and providing incentives for innovation and productivity.

"This program will reward those contractors that have demonstrated superior performance in delivering quality products and services affordably and on time," Gates said.

He said the new rules were already being used to cut the cost of a Navy ballistic missile submarine to $5 billion from $7 billion, and would pay dividends on the Lockheed Martin Corp F-35 fighter, now projected to cost $382 billion.

Carter said the rules would focus heavily on the Pentagon's use of service contractors, which accounts for as much as it spends on weapons.

"Our people who buy ships, buy ships for a living. They're really good at it. Everybody buys services in the department ... they're amateurs," he said.

Carter said defense officials had worked closely with industry in framing the new rules and that the alternative to making changes now was more canceled programs.

Gates has won the grudging admiration of many watchdog groups because of his ability to halt work on Lockheed's F-22 fighter last year, and his efforts to hold contractors more accountable for delays and budget overruns.

But lawmakers have rejected efforts to kill a second engine being developed for the Lockheed F-35 fighter by General Electric Co and Britain's Rolls Royce Group Plc.

Gates scored a victory on Tuesday when the Senate defense appropriations subcommittee included no money in its 2011 budget proposal for the alternate engine, but the House could still push for the funding during conference negotiations.

The House of Representatives also voted to amend its defense spending bill and add a four-year deal for new Boeing Co F/A-18 fighter jets, which Gates called "a win-win for government and industry that will save $600 million."

U.S. defense stocks ended lower across the board as investors mulled the impact of the measures. Lockheed shares ended down 1.4 percent at $68.48; Boeing closed down 2.2 percent at $62.76, and Northrop Grumman Corp closed down 0.79 percent at $58.34.

The Standard & Poor's Aerospace & Defense index fell 0.8 percent. The index is up about 1 percent this year but off about 29 percent from an all-time high in October 2007.

(Additional reporting by Phil Stewart and Karen Jacobs; editing by Bernard Orr, Dave Zimmerman and Andre Grenon)

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Comments (5)
hariknaidu wrote:
I am old enough to recall Eisenhower’s farewell speech to the nation in which he attacked the nefarious political influence of the military-industrial complex and its influence not only on foreign policy but budget and economic priorities.

Globalization and post-cold war politics has changed the paradigm of international politics. Yet Congress and its military-industrial lobby has been entrenched and fighting for weapons system designed and formulated during the cold war against Soviet Union.

It’s time to set in formal legislative language rate at which Pentagon budget must retrench annually (5-10%) to allow fiscal houshold consolidation and rebalacing of national programs and priorities.

Otherwise fall and decline of American
power will inevitably favour rise of mainland China.

Sep 14, 2010 3:40am EDT  --  Report as abuse
Butch_from_PA wrote:
The United States is a war machine… or at least it’s politicians answer to the military.

It’s actually built in to the American psyche at an early age by the adulation of guns, explosions and massive killing with every popular action movie.

Believe it or not – the support for the military and the fear of not having the latest greatest killing devices is in our DNA. The military did a great job weaning us up to support their and their corporate friends’ pork bellies.

Think of any decade in the last 60 where we did not have some excuse to go to war (covert or in the open).

Watch, there will be some sort of high tech terrorist attack in 2011 – to get us back into massive spending on war equipment.

Sep 14, 2010 7:05pm EDT  --  Report as abuse
MerrillGrinch wrote:
The “defense-industrial complex” is a massive welfare program for the American middle class. You think all the beneficiaries of this spending are going to give up their jobs easily? Sure there is much waste and inefficiency, lots of useless studies and analysis, but you can be sure the local congressman/woman will go to bat for his/her constituents when any mention of “cuts” is uttered.

Sep 14, 2010 9:37pm EDT  --  Report as abuse
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