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Gupta: We can save billions with the right practices

December 2, 2010

We are in a dire budgetary situation where our security is being destabilized by our lack of economic prowess, yet we believe we cannot reduce defense spending. The first problem we have to acknowledge and fix is that the national security budget is derived through an outdated process that imposes no demands for prioritization or rationalization of capabilities across the portfolio of investments. For this reason, no one really knows if additional spending buys more security. We continue to buy additional planes, ships, and other major equipment even though less expensive platforms could provide the same capability. The second problem we must recognize is that the Pentagon and other departments have yet to fully comply with the CFO Act and present fully auditable financial statements for each major acquisition and do so with all of the costs clearly identified. Until then, there will no true accountability for the costs of systems and therefore no reliable data to prioritize and rationalize. The third problem is due to a combination of acquisition practices and culture. We must acknowledge that the national security community has yet to benefit fully from performance- and service- based contracting for much of its consumables. Even though the laws call for commercial approaches to acquisition, DOD has yet to fully develop and implement these practices. In addition, the staff that has to carry out these different practices lack the training to be successful or the sponsorship to fully execute. To save hundreds of billions per year will require (1) prioritization and rationalization, (2) transparency, auditability, and accountability, and (3) modern acquisition processes and acquisition staff trained in these methods.

– Rahul Gupta, Senior Advisor, and Partner, PRTM Management Consulting

This is from a series of posts by our staff in response to this question: How can national security transformation contribute to fiscal responsibility?

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