Major Defense Acquisition Shakeup Coming

The Pentagon isn't talking but senior defense industry execs certainly are, and they are mighty worried. Ashton Carter, the Pentagon's chief weapons buyer, summoned execs from leading defense industry firms to Washington for a hastily called meeting today to discuss cost cutting, efficiency and policy changes in the way the military buys weapons.

The calls from Carter’s office went out Friday morning, sending anxiety through the executive suites of the big defense firms. Our own Colin Clark reports:

“This is so last minute,” said one industry observer, noting that the Pentagon has shared no information with industry yet. “If this was seen as collaborative effort on how to fix challenges you would see much less anxiety since it would then be predictable.”

Another defense source said “industry “is quite apprehensive about what cumulative impact this may have on profits.”

Carter will meet this morning to brief industrialists on what's coming at the Center for Strategic and International Studies, located on the K St. corridor in Washington, D.C. A second meeting with military acquisition officials is scheduled for this afternoon at the National Defense University.

Carter’s message to industry is a follow up to Defense Secretary Robert Gates’ speech at the Eisenhower Library in Abilene, Kansas, where he quoted Eisenhower’s warnings about the “grave implications” of “an immense military establishment and a large arms industry.” Gates announced then a DoD-wide effort to cut overhead costs by eliminating redundant levels of management.

He also said larger changes were in the works in the basic budgeting process and how the military services come up with weapons requirements.

The Defense Department must take a hard look at every aspect of how it is organized, staffed, and operated – indeed, every aspect of how it does business. In each instance we must ask: First, is this respectful of the American taxpayer at a time of economic and fiscal duress? And second, is this activity or arrangement the best use of limited dollars, given the pressing needs to take care of our people, win the wars we are in, and invest in the capabilities necessary to deal with the most likely and lethal future threats?

As a starting point, no real progress toward savings will be possible without reforming our budgeting practices and assumptions. Too often budgets are divied up and doled out every year as a straight line projection of what was spent the year before. Very rarely is the activity funded in these areas ever fundamentally re-examined – either in terms of quantity, type, or whether it should be conducted at all. That needs to change.

-- Greg Grant

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