Pentagon Commission: $25B/Year Savings to Be Had
The Pentagon’s Defense Business Bureau, an advisory group designed to give private sector expertise to senior leaders, announced its global analysis of DoD practices found potential savings of about $25 billion per year, to be squeezed mostly out of logistics, procurement, property management, HR, and healthcare, in that order.
The savings presume a capacity for the military to create ongoing and cumulative productivity increases – as does the private sector, generally. While the rather top-down analysis is likely to seem far fetched to military professionals, it does starkly compare behaviors in the private sector that differ, and that have resulted in vast, cumulative efficiencies.
When it comes to specifics, speaks generally about four areas of recommendations: renegotiating contracts; cutting the workforce; IT modernization and the catch-all business process re-engineering.
DoD contractors will be interested to see the nature of the target painted on their piece of budget pie. The DDB hopes to realize $9 to $18 billion in savings per year by saving 10-25 percent of contract spending. How they hope to do that? “More rigorous” negotiations; contract aggregation for economies of scale; a push for greater productivity in labor contracts; and the elimination of gold plating requirements.
Deputy Defense Secretary Bob Work charged the DDB with producing the report back in October in an effort to gauge the scope of changes that would help modernize the whole of the defense enterprise.
The report doesn’t break too much ground in terms of tactics recommended, as previous reports have largely enumerated the various savings the DDB hopes the military will recognize.
