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MILPLEX
Pentagon vows to cut waste in contracts

by Staff Writers
Washington (AFP) Sept 14, 2010
The Pentagon on Tuesday vowed to crack down on the cost of contracts for weapons and services, issuing new rules designed to make the military's vast bureaucracy more efficient.

Defense Secretary Robert Gates said the guidelines would aim to bolster productivity for contracts that make up about 400 million dollars in the department's roughly 700 billion annual budget.

The rules "will enable this department to make programs more affordable without sacrificing important capabilities and prevent us from embarking on programs that have to be canceled when they prove unaffordable," Gates told a news conference.

In describing the new rules, a memorandum sent to Pentagon managers by the undersecretary of defense describes the goal of increasing productivity in blunt terms and in upper case: "DO MORE WITHOUT MORE."

With a troubled US economy and mounting budget pressures, the move is part of Gates's goal to save 100 billion dollars in administrative and other costs over five years to free up money for weapons and troops.

Gates said the stricter rules will affect several big-ticket programs worth 200 billion dollars, including a new ballistic missile submarine, a ground combat vehicle, a next generation long-range bomber and the US Marine Corps' presidential helicopter.

The approach was meant to avoid the disastrous cost overruns that marked a previous attempt to develop a new presidential helicopter, said Gates, who cut or curtailed numerous weapons programs in 2009.

The 23 guidelines call for rewards for companies that save costs, a basic "affordability" test for all programs from the outset, more competitive bidding and streamlining Pentagon red tape.

A major focus of the reform effort will be aimed at contracts for services, which comprise 200 billion dollars or nearly half the contracting budget, Gates said.

Ashton Carter, who as undersecretary of defense oversees arms purchases, said most cost-cutting efforts have tended to focus on weapons contracts while money set aside for services has sky-rocketed.

"Our statistics show that we're performing even worse in the acquisition of services than in the acquisition of weapons," Carter said at the same press conference. "A lot less attention has been paid to this area."

The Pentagon has even lacked standard definitions for contracting out different types of services, he said.

"It's as though you were buying weapons and you never distinguished planes, ships and tanks," he said.

The defense industry understood that Pentagon spending would be coming under more scrutiny, with the military's budget increasing at a more modest rate, Carter said.

"They know we're entering a different era," he said.

But he said the reform measures would offer incentives to industry to deliver projects on time and under budget.

Carter cited the F-35 Joint Strike Fighter program as an example of the Pentagon's new approach.

The F-35 has faced delays and cost overruns, but Carter said the Pentagon is offering possible financial rewards to aerospace giant Lockheed Martin if the company can hold down the average cost of the fighter.

The initial estimate for each F-35 aircraft was 50 million dollars eight years ago but the latest estimate is up to 92 million dollars.

earlier related report
US plans massive arms sale to Saudi to counter Iran threat
Washington (AFP) Sept 13, 2010 - The United States plans to offer Saudi Arabia 60 billion dollars' worth of hi-tech fighters and helicopters to help counter the threat posed by Iran, in the largest ever US arms deal, officials said Monday.

A senior defense official said President Barack Obama's administration would formally notify Congress this week or next about the groundbreaking deal, which follows months of talks with the Saudis, who are increasingly anxious about Iran's missile arsenal.

"If you look at the kingdom, the major threat that they face in the region emanates from Iran," the official, who spoke on condition of anonymity, told reporters.

"And this gives them a whole host of defensive capabilities to defend the kingdom and deterrence capabilities."

US officials see the package as underscoring the strategic alliance between the two countries, despite serious strains over Middle East diplomacy and the aftermath of the September 11, 2001 attacks.

"The (Saudi) king sees this as very symbolic of the relationship we have with him and the kingdom," the official said.

In its notification to Congress, the administration will authorize the Saudis to buy as many as 84 new F-15 fighters and upgrade 70 more, as well as three types of helicopters -- 70 Apaches, 72 Black Hawks and 36 Little Birds.

The package would also include HARM anti-radar missiles, more precision-guided JDAM bombs, Hellfire missiles and sophisticated displays mounted on fighter pilots' helmets.

Although previous arms sales to Saudi have often encountered strong opposition from Israel and its allies in the US Congress, the administration expected the deal to win approval and that Israel would not object to the sale.

"The Israelis I think are fairly comfortable that this configuration is not a threat to their qualitative, military edge," he said.

Israel will be getting a more advanced, "fifth generation" US fighter jet in the F-35.

Lawmakers would also likely support aircraft production that "involved" 77,000 jobs across the country, the official said, though it was unclear how many new jobs would be created by the deal.

Some congressional officials, however, said the deal would be subject to tough scrutiny by lawmakers and might be revised.

"There is serious concern about some sensitive material which is expected to be included in the deal," said one source, who told AFP that Obama aides would brief congressional staff on the deal on Monday.

"You can fully expect that a hold will be placed on this deal," said another senior congressional source.

A "hold" would come from the chair or ranking member of the House Foreign Affairs Committee or Senate Foreign Relations Committee, which typically must sign off on arms transfers, and could change what is in the package.

It remained unclear if the Saudis would opt to buy the entire 60-billion package or a lower number of aircraft, the defense official said.

"But in any world, this is an enormous arms package. In fact, the notification is the largest of its kind in history," he said.

The administration is also in talks with the kingdom about potential improvements to the country's naval fleet and missile-defenses, which could be worth tens of billions of dollars more, the official said.

The Saudis were looking at possibly buying littoral combat ships, with the naval talks at a more advanced stage than discussions on ballistic missile defenses, he said.

Top American officials, including the military chief of the US Missile Defense Agency, have been urging Saudi leaders to purchase Terminal High Altitude Area Defense systems, or THAAD, and to improve the country's Patriot missiles.

Earlier, media reports said that to assuage Israel's concerns, the Obama administration had decided not to offer Saudi Arabia so-called standoff systems, which are advanced long-range weapons that can be attached to F-15s for use in offensive operations against land- and sea-based targets.



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