Defense

September 6, 2012

Partners, innovation help Pentagon deal with budget cuts

The Defense Department is dealing with long-term budget reductions by working more closely with international partners and continuously improving performance, the undersecretary of defense for acquisition, technology and logistics told an international audience Sept. 5.

Frank Kendall delivered the opening address, titled International Partnerships for Coalition Success, at ComDef 2012, a conference of government and industry representatives from more than 25 countries.

Enduring partnerships are critical “in an austere time when we have fewer resources ourselves [and] we have to look to others to work with us,” Kendall said.

“I have spent more time with my partners than I realized I would spend in this job, and all for very good reasons,” he added.

“We have very strong partnerships, we’re building some of those to be even stronger, and we are forging new partnerships around the world with nations that share our values and our security interests,” said the undersecretary, whose responsibilities include acquisition, research and engineering, contract administration, logistics and the defense industrial base.

At DOD, he said, “dominating our conversations right now are budget reductions and their implications and how we’re going to handle them,” Kendall said, adding that he couldn’t give a speech without addressing sequestration.

The 2011 Budget Control Act is a U.S. federal statute that seeks to reduce the national deficit. Sequestration is a mechanism built into that act to trigger a half-trillion-dollar cut to defense spending over the next 10 years if Congress doesn’t otherwise identify spending reductions the act requires. This is in addition to $487 billion in cuts over 10 years that DOD already is making and that are accounted for in a new defense strategy released in January.

Kendall told that conference that during his confirmation hearing, he told senators sequestration would have a devastating impact on the department. Defense Secretary Leon E. Panetta has talked about it as a “meat ax approach,” he added.

“Even if you feel the need to reduce the size of our budget and cut defense,” the undersecretary told the conferees, “doing it the way sequestration does it – and that’s really our biggest problem with it – is really a very bad way to do it.”

The way sequestration works makes having a plan to execute it irrelevant, the undersecretary said.

“If we have a budget, there are roughly 2,500 lines in that budget, and we have to cut each of them [by the same amount],” he added. “There are 2,500 lines — take about 11 percent out of each one.”

Defense officials have been trying to understand the effects of such cuts on the force and on programs, Kendall said. One effect will be on overseas contingency operations, or OCO – money that’s appropriated for fighting in Afghanistan – which will be included in sequestration cuts, he added.

“So OCO is hit, prior-year obligated funds are hit, [and] all [DOD funding for fiscal year 2013] is hit, whether it’s been obligated or not,” Kendall said.

If the government must operate under a continuing resolution rather than a budget, he added, “which is the probable course, we’ll have to go back and figure out a way to get a net of about 11 percent out of those lines as well.”

The Defense Department has not created a detailed plan, the undersecretary said, in part because not much planning is required.

“We have looked at a few samples of programs and different areas,” Kendall explained, “and it varies from being relatively easy to absorb, where you’re simply doing a level of effort that’s a little bit lower, to something that’s fairly significant in its impact on contracts, like multiyear [contracts], for example, that are already in place.”

If the department is asked to prepare a more detailed plan, it will, but Pentagon officials are counting on Congress to avoid the need for sequestration,” he said.

The problem, Kendall added, is that sequestration “doesn’t allow us to prioritize. It doesn’t allow us to find the things that are least important to us. It doesn’t allow us to avoid some of the damage that will be done by this kind of a mechanism.”

His own priorities as undersecretary, Kendall said, include ending the war in Afghanistan, creating affordable defense programs, boosting defense efficiencies, promoting innovation and reducing bureaucracy.

“We’re still engaged in Afghanistan, and we have a lot to do there,” he said. “We’re still involved with a broad coalition and with the [Afghans] to bring the war to a successful conclusion, and [we still have to] execute the retrograde operation as we pull our people and equipment out of the country.”

Kendall, who was deeply involved in the effort to remove U.S. forces from Iraq, called the end of the war in Iraq “a piece of cake compared to what we have to do in Afghanistan.”

The conflict in Afghanistan will be ongoing to a greater extent than it was in Iraq, he added, “and we have a much more difficult logistics job ahead of us.” Also, he said, the expense of resetting the equipment as it comes home is a factor. But Kendall praised the partnerships that have been built in Afghanistan over a decade of war.

The Defense Department has a long history of starting projects that it could not afford, Kendall acknowledged. But over the past two years, he said, the department has been forcing programs to put cost caps on programs up front “so they’re designed to a cost cap and requirements are traded off in order to stay within an affordable cost.”

Kendall said the department has used that approach on programs such as the Air Force’s new long-range strike bomber, the Army’s new ground combat vehicle and the Navy’s replacement for the Ohio-class ballistic missile submarine.

On efficiencies, Kendall said he’s a big believer in continuous improvement. He noted that he worked with his predecessor Ashton B. Carter — who now serves as deputy defense secretary — to build momentum in that regard.

“The Better Buying Power initiative that Dr. Carter and I rolled out two years ago was essentially an attempt to get at efficiencies through a number of best practices,” he said, adding that he soon will roll out a new version of the program that incorporates adjustments to strengthen the program while keeping its focus on controlling cost growth and placing strong emphasis on competition – including a more open attitude to international approaches.

On innovation, Kendall said the department should look more to new technologies and to more commercial practices. And removing bureaucratic barriers will be a continuing emphasis.

“I don’t want to make excuses for anybody,” Kendall said. “The Defense Department can do better – we can do a lot better – and we’re going to continue to work to make sure that happens.”

 




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