No, “Better Buying Power” is not the title of a Sunday infomercial for flipping real estate. It’s the title of a recently released defense memo to the federal acquisition workforce. After years of blaming the budget process, requirements definitions, and the acquisition workforce, senior Department of Defense (DoD) leadership has come to the realization that it must buy better.
Ashton Carter’s June 28th memo states that in addition to buying “to support our forces at war on an urgent basis,” there is “another important priority: delivering better value to the taxpayer and improving the way the Department does business.” Citing the declining budgets and quoting Defense Secretary Gates, Carter adds that DoD must “learn to manage defense dollars in a manner that is… ‘respectful of the American taxpayer at a time of economic and fiscal distress.’”
The plan is to reduce “unneeded or low-priority overhead” and transfer those funds to “warfighting capabilities”—“doing more without more” with the $700 billion spent annually by DoD. According to the memo, $400 billion of those expenditures are on contracts for goods and services. We have all heard the saying “buyer beware,” but now DoD acquisition professionals are learning that the buyer should be aware of bloated overhead and uncover savings by finding genuine competition, avoiding risky contracts types, awarding incentive fees to those that are deserving, and eliminating non-value added costs. Sounds like many of the policy recommendations that Pentagon insiders and POGO have promoted for years.
Image: chart from a 1991 memo by Defense Department Analyst Ernie Fitzgerald, explaining how the procurement system rationalized paying excessive costs to contractors.