Cost Cutting On DoD Contracts
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by: Shaun Tat
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Word Count: 420
Date: Fri, 4 Nov 2011 Time: 5:54 AM
When it comes to contracts for projects that are taken on by the Department of Defense (DoD), affordability is the important issue. New laws have made sure that the DoD acquisition process will be under the governments regulation. The Defense Secretary has tried to increase the savings of the DoD by implementing an efficiency initiative that is value about $101 billion. The move is pretty similar to several others made by the government to reduce expenses. The military departments have been asked to ramp up their saving to $2 billion in 2012, $3 billion by 2013 and up to $5 billion by 2015. The list goes on, until 2016 when $10 billion of savings should be attained by the United States military and its various branches. The saved amount will be used as a fund for the military pay and also for purchasing weapons.
The net savings have become important as they are directly related to the DoD acquisition contracts. As the country is has to deal with a budget deficit of $2 trillion, the military cannot spend on any defense contract. The mount saved must be the amount spent. An effective savings plan was put forward by Gates, and the undersecretary of defense for acquisition, Ashton Carter, also introduced contract reforms that will increase savings.
The first change Carter brought into law is that affordability is as important as technical capability when it comes making decisions about weapons programs, such as the Army Ground Combat Vehicles and the Air Force Long Range Strike Missiles. The projects that cost too much and give little in return will be scrapped and the running programs will have to lower their spending on new equipment and maintain the ones that they have.
To decide if a particular project is viable or not, portfolio capability reviews will be conducted. The Air Force's Multi-Platform Radar Technology Insertion Program is one that is particularly at risk of being shut down for its huge costs and restricted effectiveness. The Army's Medium Extended Air Defense System is also being threatened, because shutting down these and a few other programs could save the army billions of dollars. The programs that have a good chance of being approved are between $10-$12 million and have little impact on the national budget.
These are only two of the policies that have been implemented by the Defense Secretary and the undersecretary of defense to help the US military in lowering their expenses. This holds good for DoD acquisition process as well and still maintains our status as the best army on the planet.
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