DoD plots third chapter in Better Buying Power initiative

Nothing is on paper yet, but the Defense Department says it is in the very early stages of creating a “3.0″ version of its ongoing Better Buying Power initiative.

The newest edition will focus on making sure the military doesn’t fall behind in technological superiority.

Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics, said the next edition of the Pentagon’s effort to improve its acquisition system will zero in on an issue that he has become increasingly worried about as sequestration-level budgets take a toll on DoD’s investments in research and development.

While he emphasized that Better Buying Power 3.0 still is in the idea stage, he said it will revolve around the notion that DoD can’t afford to put technology advances on hold just because research dollars are shrinking.

“The first iteration was about the rules. The second one was about creating tools to help people think and do a better job of setting up business deals and executing them. The third is probably going to be about innovation and how we move things more rapidly and more effectively into the hands of warfighters,” he said Tuesday (Apr. 8, 2014) at the 15th annual Science and Engineering Technology Conference sponsored by the National Defense Industrial Association in College Park, Md.

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Air Force bets $41 billion on sequestration

Air Force Secretary Deborah Lee James has placed a $41 billion bet that Congress will ease off on the mandatory spending cuts in the sequester process and also go along with a White House proposal to raise taxes.

“We will be working hard to convince Congress that there’s too much risk” to the Air Force and the nation if the $41 billion in additional funding is rejected, James said last week at a defense issues forum.

In offering the Pentagon’s Fiscal Year 2015 budget plan last week, Defense Secretary Chuck Hagel also put forward a five-year projection calling on Congress to boost military spending by $115 billion through sequester relief.

Hagel is counting on an additional $26 billion for defense from the total $56 billion Growth and Opportunity Fund that President Obama plans to outline Tuesday in the White House budget plan.

The $56 billion for the Fund would come from a combination of tax increases and offset spending, White House officials.

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Here are the predicted winners and losers in the FY15 budget

While its passage in Congress is far from guaranteed, the Pentagon’s budget request for fiscal 2015 has some clear winners and losers on the weapons-acquisition front.

The Defense Department on March 4 will request its spending plan for the fiscal year beginning Oct. 1. The base budget, excluding war funding, will total $496 billion, Defense Secretary Chuck Hagel said during a press conference Monday afternoon (Feb. 24, 2014) at the Pentagon.

Hagel spent a portion of the hour-long briefing discussing the department’s modernization plans.

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Pentagon to trim plans for F-35 jet order

The Pentagon will request 34 Lockheed Martin F-35 jets in its budget for the fiscal year starting Oct. 1, eight fewer than previously planned, according to officials.

The fiscal 2015 request, to be released March 4, will include funds to buy 26 of the Air Force’s model, six of the Marine Corps’ short-takeoff and vertical-
landing jets and two of the Navy’s version for aircraft carriers, according to officials familiar with the plans, who asked not to be identified because the budget hasn’t been made public.

Even with the decrease from past plans, the defense budget reflects pledges by officials to do all they could to insulate the costliest U.S. weapons program from federal budget cuts. Marillyn Hewson, chairman and chief executive of Bethesda, Md.-based Lockheed, predicted in a Feb. 10 interview that the company’s F-35 program is “going to continue to grow and become a larger part of our portfolio.”

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OMB says budget deal means no further sequester cuts in FY14

Federal agencies will not face any additional sequester-related spending cuts for fiscal 2014 following passage of December’s bipartisan budget deal, the Office of Management and Budget confirmed in a report this month.

Under the deal, Congress agreed to partially roll back discretionary spending reductions previously mandated in 2011, leaving total defense spending—not counting funding for the Afghanistan war—at $520.5 billion and total spending on other programs at $491.8 billion this year. Lawmakers also reworked the caps for next year to keep overall discretionary spending at about the same benchmark; for 2015, the caps on security and non-security spending are $521.3 billion and $492.4 billion respectively, according to the OMB report.

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Pentagon said to be planning to boost missile defense spending by over $4 billion

The U.S. Defense Department plans to ask Congress for $4.5 billion in extra missile defense funding over the next five years as part of the fiscal 2015 budget request, say congressional sources and an expert.

Nearly $1 billion of that sum will pay for a new homeland defense radar to be placed in Alaska, with an additional $560 million to fund work on a new interceptor after several failed flight tests, said Riki Ellison, founder of the nonprofit Missile Defense Advocacy Alliance, and two of the congressional sources, who were not authorized to speak publicly.

The Pentagon’s request for added funding comes despite continued pressure on military spending and cuts in other arms programs, a sign of Washington’s growing concern about missile development efforts by North Korea and Iran, the sources said.

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Federal contract spending down for 4th straight year

Government spending cuts last year contributed to the fourth straight annual decline in federal contracting, the longest stretch since Ronald Reagan was president, statistics show.

The value of contracts to companies such as Boeing Co. and Northrop Grumman Corp. fell 11 percent in the year ended Sept. 30 from the previous period. It is the biggest annual decline since records began in 1984, according to data compiled by Bloomberg Industries analyst Brian Friel.

The reductions led contractors to shed jobs and could spur another round of defense industry consolidation. Analysts tied most of the drop to across-the-board spending cuts under a process known as sequestration, including $85 billion that started March 1 for fiscal 2013. A congressional budget accord relieved the Pentagon of $22.3 billion in cuts set for this fiscal year.

“This is not a case of government functions being moved from federal employees to contractors or vice versa,” said Dan Gordon, associate dean for procurement law at George Washington University Law School in Washington and former top procurement official for President Barack Obama. “This is the government spending less.”

The value of unclassified federal prime contracts, publicly announced deals of at least $3,000, in the 12 months ended Sept. 30 fell to $456.2 billion from $512.8 billion in the previous fiscal year. The totals exclude intelligence projects or awards to subcontractors.

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NDAA enshrines DoD cost-cutting as law

Defense Secretary Chuck Hagel has already set about implementing a plan to cut $1 billion from the Defense Department’s budget by consolidating and reorganizing top Pentagon offices.

But lawmakers want to hold his feet to the fire. The final version of the National Defense Authorization Act (NDAA) passed by Congress Dec. 19 enshrines DoD’s ambitious cost-cutting and streamlining plan into law.

President Barack Obama signed the annual legislation setting Pentagon policy and priorities on Dec. 26.

By June, Hagel must develop a plan for streamlining DoD management headquarters “by changing or reducing the size of staffs, eliminating tiers of management, cutting functions that provide little or no added value, and consolidating overlapping and duplicative programs and offices,” according to the bill language.

The plan must include the estimated cumulative savings to be achieved over 10 years beginning in fiscal 2015 through 2024.

The law directs DoD to look across the Pentagon for potential savings, including the Office of the Secretary of Defense, the Joint Staff and the headquarters of the combatant commands, among other areas.

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How Ash Carter oversold DOD’s savings record and his role

Outgoing Deputy Secretary of Defense Ashton Carter’s article “Managing Defense Spending Through ‘Better Buying Power,’ Not Sequestration,” convincingly demonstrates why and how the Department of Defense has and continues to waste so much of the taxpayer’s money.

Carter grossly exaggerates the reduction to the level of defense spending caused by the Budget Control Act. According to Carter, in September 2010, then-Defense Secretary Robert Gates launched a defense-wide efficiency initiative to promote greater efficiency and productivity in defense spending called “Better Buying Power”. This initiative initially directed 23 principal actions in five major areas including eliminating cost growth and promoting competition in major weapons programs. The impetus for this initiative was Gates’ conclusion that the days of increasing defense budgets were coming to an end.

While the Pentagon, as any government agency, should always strive to be efficient, the real question was why Gates waited for four years after taking office, and for a time when defense budgets were not going to increase, before launching his initiative. Were he and his staff, including Carter, who was his undersecretary for acquisition, not trying to eliminate cost growth and promote competition while the budget was going up? Obviously not. As the Government Accountability Office has pointed out, the cost of the 95 major weapon systems developed by the Pentagon exceeded $400 billion in the first 10 years of this century.

Carter also provides some examples from each of the services to show how much money they have and will save by using these initiatives. Leaving aside the question of whether the savings will actually materialize. Carter fails to mention the cost overruns that continue to occur. For example, the first new Gerald Ford-class aircraft carrier, which was christened this month, came in “only” 20 percent above projected cost.

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Expect sequestration to hit much harder in 2014, report says

Less severe cuts, deferred costs and temporary solutions mitigated sequestration’s effect in its inaugural year, but will not help lessen the impact in 2014, according to a new report.

The Center for American Progress, a liberal think tank, said the tactics federal agencies used to reduce furloughs in fiscal 2013 are, in many cases, no longer available. In fact, they will largely accentuate the severity of the cuts this time around.

For example, Congress allowed the Federal Aviation Administration to move funds from an account meant to provide maintenance to airports nationwide to avoid furloughs of air traffic controllers that would have delayed flights. Similar budgetary “gimmicks” were employed at the Agriculture Department to stave off furloughs of meat inspectors and by the Justice Department, which has already announced plans of 10 furlough days for FBI agents in 2014.

Every major federal agency reduced its furlough projections in fiscal 2013, though that will likely be impossible this year, the report found.

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