The boss Bill Sweetman and I have a story in the January issue of DTI jumping off from the old saying, “We have run out of money, so now we must think . . .”
For the first time in a decade, the Pentagon is going to have to budget, rather than just spend. This not only means some programs will have to be removed from the procurement ledger, but new weapons programs will have to cap development—and perhaps more importantly, sustainment costs—significantly.
At the Credit Suisse/Aviation Week 2011 Aerospace and Defense Conference in New York in December, Shay Assad, the Pentagon’s director of defense pricing and acquisition policy, tried to assuage some fears defense contractors have vocalized about their potential profits now that the Pentagon is going on a diet. Assad said the Pentagon is making an effort to use the promise of profitability “to motivate contractors to reduce their cost structures.” To track this effort the Defense Contract Management Agency is adding more than 350 experts in cost estimating: If costs can be more accurately predicted up front, everyone will enter an agreement with the same realistic expectations.
Read the whole thing here!