Any way you look at it the current defense acquisition system is busted. New programs take too long to reach fruition and cost too much. Past and even present efforts to reform acquisition are examples of rearranging the deck chairs on the Titanic. The problem with most reformers is that they believe the system is basically sound and just needs some fine tuning to make it lean, efficient and effective. For a variety of reasons, most having to do with the unique characteristics of the goods and services procured for the military but others a result of the peculiarities of any state-run economic system, defense acquisition will never operate along the lines of the commercial economy. We need to stop trying to transform defense acquisition into a camouflage-painted version of the commercial industrial base.
But there are some very simple, common sense steps that could save billions. Advanced funding for procurement of materials, multi-year procurements and block buys would go a long way to reducing the costs associated with major weapons platforms. Anyone who shops at Costco or BJs knows that when you buy in bulk you save money. The Virginia-class attack submarine program has been able to reduce the cost of each platform by hundreds of millions of dollars while inserting enhanced capabilities. This success has been replicated in other programs with multi-year procurements such as the F/A-18 E/F, the V-22 Osprey and defense satellites.
Related to the use of multi-year procurements and block buys is the application of the principle of incremental funding. Today, for example, the Department of Defense has to put all the money up front when it wants to buy a ship. That is like giving your contractor all the money in advance for a home remodeling job. Nobody does that. The Pentagon should establish a defined level of money for each ongoing major procurement (e.g., aircraft carrier, destroyer, submarine, F-18s, F-35s, Stryker vehicles, etc.) and use the money to fund the portion of production that occurs in that given year. This would also mean there would not be tens of billions of dollars sitting around in untouchable accounts waiting years to be expended in the final touches to a warship.
Another no-brainer for reducing costs is to manage the supply chains for major items on a global scale. One of the most transformative factors in the modern global economy is end-to-end supply chain visibility and just-in-time delivery. The private sector does it all the time. In fact, one of the smartest things DoD could do is to turn over supply chain management to the private sector. This is something the government just cannot do well.
Taking these steps and a few others could potentially save the Pentagon the equivalent of what it may lose through sequestration. It is time to take some very pragmatic, simple and straightforward steps to turn a broken defense acquisition system into one that works again.
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