* Pentagon could do "infinitely better" - undersecretary
* Draft of revamped initiative expected Nov. 13
* Department will also review cumbersome acquisition rules
By Andrea Shalal-Esa
WASHINGTON, Nov 5 The Pentagon's chief weapons
buyer mapped out the next phase of a "better buying power"
initiative on Mo nday, saying the U.S. military could do
"infinitely better" in the way it buys weapons and services.
Frank Kendall, undersecretary for acquisition, technology
and logistics, shared key details at a conference hosted by the
National Government Contract Management ahead of the formal
release of updated acquisition reform guidelines next week.
In addition to updating the "better buying power" initiative
first released just over two years ago, Kendall said the
Pentagon would also start a year-long review of its current
5000-series acquisition rules, which have grown cumbersome and
unwieldy due to piecemeal legislation in recent years.
At the same time, officials would gather more data on the
Pentagon's own track record on procurement, Kendall said. He
noted an initial review revealed little change in procurement
programs over the past 30 years despite repeated reform efforts.
He said new weapons programs generally had cost overruns of
27 to 28 percent, while major weapons programs were often 8 to 9
percent over budget during the early years of production.
Lockheed Martin Corp, Boeing Co, Northrop
Grumman Corp, General Dynamics Corp, Raytheon Co
and other defense firms are awaiting news on the
Pentagon's approach to contracts as they brace for lower defense
spending after more than a decade of growth.
In recent years, many of the companies have criticized the
Pentagon's war on overhead costs, arguing that government
oversight itself sometimes makes weapons more expensive. They
have also cited long delays in getting contracts signed.
Kendall said the new acquisition initiatives were developed
with input from U.S. weapons makers and service providers, and
would actually roll back a few directives in the last version.
He insisted the department wanted to preserve a "healthy,
efficient and effective" defense industrial base that was able
to generate good profits, but said the sector also needed to be
more "lean" in the current austere environment.
The former Raytheon executive said it was important for
defense officials to listen to industry's concerns while still
maintaining an "arms' length business relationship to ensure
that our contracts are executed as intended."
Kendall said a draft version of the changes would be
released in coming weeks to allow companies to respond with any
concerns or suggestions. One aide to Kendall said the revamped
guidelines would be released on Nov. 13.
Kendall said some components of the Pentagon's first "better
buying power" drive paid off, but others needed more work,
including a big focus on reining in cost overruns on some
hundreds of billions of dollars spent on service contracts.
He said the new document would encourage a more
differentiated use of various contract types, backing off an
earlier directive that resulted in far greater use of fixed
price contracts with incentive fees.
Kendall said such contracts were useful early in the
production of new weapons, but not while programs were still in
development. "There's a balance there," he added.
Key elements of Kendall's "Better Buying Power 2.0" include:
-- a continued drive to assess the long-term cost of weapons
programs before they even get started, and keeping costs under
control throughout the life of a program
-- assessment of the "productivity" of the Air Force, Navy,
Marine Corps agencies that oversee acquisition programs, as well
as the private companies that supply weapons and services
-- consideration of possible exports in initial designs of
weapons, which could save money in the longer run
-- incentives for companies to perform well on programs and
develop new innovations
-- better definition of so-called "best-value" competitions
so that contractors understand data before submitting bids
-- creation of a superior supplier program that would reward
companies for good performance, perhaps by lowering oversight
requirements, or giving them bonus points in future contests
-- greater use of performance-based logistics contracts in
which companies provide services and parts as needed
-- a tough review of "unproductive processes," including how
joint program requirements are drafted and set
-- a bigger focus on training the Pentagon's cadre of
acquisition experts, which has grown by up to 13,000 people in