September 30, 2014

Pentagon Plans to Focus on Affordability for a Change

  • Defense spending accounts for roughly half of the portion of the budget referred to as discretionary spending, which is determined through the annual...

Defense Secretary Robert Gates, who hopes to save the Pentagon $100 billion over the next five years, has explained in more detail how he plans to do so.

Gates said contracting would be made more efficient and productive in a speech last week at the Pentagon, which has an annual budget of $700 billion. Managers will be guided by estimates for what programs should cost if managed efficiently, an improvement over just relying on the cost of similar programs in the past. Program managers will now have to establish “affordability targets” that can only be changed with approval from the undersecretary of defense for acquisition.

“This guidance will make programs more affordable without sacrificing capabilities,” Gates said, “and prevent us from embarking on programs that will need to be cancelled when they prove unaffordable.”

With the U.S. government facing extremely high deficits now and in the future, it must do everything possible to ensure greater efficiency and savings. This certainly holds true for the Pentagon, where spending has more than doubled over the last decade. Gates is moving in the right direction by implementing institutional change in how the Pentagon does business.