From National Association of Government Contractors
Gates says contracting cuts on the way
By Simon Brody
Tuesday, August 10th, 2010
Tuesday, August 10th, 2010
Traditional weapons programs like shipbuilding and emerging capabilities like cyberwarfare may be beneficiaries of the one-third, three-year cut in services support contracting that U.S. Defense Secretary Robert Gates outlined Aug. 9.
The steps announced were at once sweeping and seemingly nibbling, but all will be up for what promises to be a contentious congressional review in the Fiscal 2012 budget process.
Still, service contractors certainly will see strong headwinds as Gates, in a high-profile Pentagon press conference, said nascent insourcing efforts were not going far enough and that the way to cut excessive contracting costs was to root out offices and practices that generated them.
"To be clear, the task before us is not to reduce the department's top-line budget," he said. "Rather, it is to significantly reduce its excess overhead costs and apply the savings to force structure and modernization."
Gates asserted to reporters that he was "determined" to change the way the Pentagon did business, and he said he would be staying longer than he or others once predicted. The chairman of the Joint Chiefs of Staff, Navy Adm. Mike Mullen, announced his support for the moves.
Several lawmakers, however, erupted in opposition. In particular, the Virginia delegation and governor announced a "united front" to fight the closure of U.S. Joint Forces Command (Jfcom), as Gates is recommending, and questioned whether Washington really would allow greater investments in areas like shipbuilding.
"The American people will see this decision for what it is: a first step in a long string of national defense cuts that will systematically and intentionally gut the institutions that protect and defend the freedoms and liberties upon which our nation was founded -- and they will not stand for it," declared Virginia Rep. J. Randy Forbes, a Norfolk-area Republican and major booster of modeling/simulation and shipbuilding.
Still, the Gates-led Pentagon appears to be in the opening stages of what looks to be an almost unprecedented effort: to trim a bloated and duplicative Pentagon bureaucracy while at the same time maintaining the year-to-year defense budget expanding at a clip of 2%-3% in real growth.
Gates' announcement -- on the first business day that all lawmakers were out of town for their summer recess — is designed to follow his call this spring for $101 billion in reallocated internal spending so that major weapons programs could be buttressed.
As before, he declared that the armed services would get to keep their so-called savings; but he went further by adding that savings found elsewhere in the department would also go to the core weapons and capabilities deemed critically important, rather than back into non-branch agencies. One specific example offered by Gates to reporters, addressed to the Virginia delegation, was adding billions of dollars more to the Navy's underfunded shipbuilding plan.
Besides Jfcom -- funded at about $1 billion a year including $240 million for the salaries of the contractors -- Gates also is pursuing closure of the Business Transformation Agency and elimination of the assistant secretary of defense for networks integration and information, and J6 function, which deal with enterprise information technology and hardware issues.
A "refashioned" Defense Information Systems Agency will perform the department's chief information office functions. The secretary also directed a zero-based review of all of the Pentagon's intelligence organizations and contracts, with the goal to strip "needless" duplication by Nov. 1, and said the new director of national intelligence could try to do similarly elsewhere.
Gates also targeted the Defense Department's own overhead, mandating personnel level cuts and freezes -- with exceptions like building up the acquisition workforce -- directly aimed at reversing a culture of spending and demand that mushroomed after 9/11.
The steps announced were at once sweeping and seemingly nibbling, but all will be up for what promises to be a contentious congressional review in the Fiscal 2012 budget process.
Still, service contractors certainly will see strong headwinds as Gates, in a high-profile Pentagon press conference, said nascent insourcing efforts were not going far enough and that the way to cut excessive contracting costs was to root out offices and practices that generated them.
"To be clear, the task before us is not to reduce the department's top-line budget," he said. "Rather, it is to significantly reduce its excess overhead costs and apply the savings to force structure and modernization."
Gates asserted to reporters that he was "determined" to change the way the Pentagon did business, and he said he would be staying longer than he or others once predicted. The chairman of the Joint Chiefs of Staff, Navy Adm. Mike Mullen, announced his support for the moves.
Several lawmakers, however, erupted in opposition. In particular, the Virginia delegation and governor announced a "united front" to fight the closure of U.S. Joint Forces Command (Jfcom), as Gates is recommending, and questioned whether Washington really would allow greater investments in areas like shipbuilding.
"The American people will see this decision for what it is: a first step in a long string of national defense cuts that will systematically and intentionally gut the institutions that protect and defend the freedoms and liberties upon which our nation was founded -- and they will not stand for it," declared Virginia Rep. J. Randy Forbes, a Norfolk-area Republican and major booster of modeling/simulation and shipbuilding.
Still, the Gates-led Pentagon appears to be in the opening stages of what looks to be an almost unprecedented effort: to trim a bloated and duplicative Pentagon bureaucracy while at the same time maintaining the year-to-year defense budget expanding at a clip of 2%-3% in real growth.
Gates' announcement -- on the first business day that all lawmakers were out of town for their summer recess — is designed to follow his call this spring for $101 billion in reallocated internal spending so that major weapons programs could be buttressed.
As before, he declared that the armed services would get to keep their so-called savings; but he went further by adding that savings found elsewhere in the department would also go to the core weapons and capabilities deemed critically important, rather than back into non-branch agencies. One specific example offered by Gates to reporters, addressed to the Virginia delegation, was adding billions of dollars more to the Navy's underfunded shipbuilding plan.
Besides Jfcom -- funded at about $1 billion a year including $240 million for the salaries of the contractors -- Gates also is pursuing closure of the Business Transformation Agency and elimination of the assistant secretary of defense for networks integration and information, and J6 function, which deal with enterprise information technology and hardware issues.
A "refashioned" Defense Information Systems Agency will perform the department's chief information office functions. The secretary also directed a zero-based review of all of the Pentagon's intelligence organizations and contracts, with the goal to strip "needless" duplication by Nov. 1, and said the new director of national intelligence could try to do similarly elsewhere.
Gates also targeted the Defense Department's own overhead, mandating personnel level cuts and freezes -- with exceptions like building up the acquisition workforce -- directly aimed at reversing a culture of spending and demand that mushroomed after 9/11.
© Copyright 2012 by National Association of Government Contractors