DOD Seeks Efficiencies in Sustainment
DOD Seeks Efficiencies in
By Claudette Roulo, American
Forces Press Service.
Washington D.C. – (AFPS)
– April 15, 2014 – When the Defense Department is looking to save money, it
turns to sustainment and logistics, the undersecretary of defense for
acquisitions, logistics and technology said today. “If you want to really
address the issues that DOD has with efficiency and affordability, you
definitely have to look at the sustainment [and] logistics side of the house,
because that is … where the money is,” Frank Kendall said at the 2014 National
Defense Industrial Association logistics forum.
The existing budget environment probably is one of the worst
he’s ever seen, the undersecretary said. Kendall served in the Army during the
1970s -- the era of the hollow force, he said -- but "2013 will go down in my
memory as one of the most unpleasant years I've gone through."
Furloughs, sequestration, the government shutdown, budget
uncertainties, readiness problems and difficulty sustaining the pace of
production and development programs served to make it a “nightmare year,”
Kendall said. "Sometime last summer, somebody said to me, 'Well, Frank, at least
you were here for the good years.' … I think back on it now, [and] 2010-2011
seem like pretty damn good years, comparatively," he said.
With the Bipartisan Budget Act of 2013, stability returned to
the defense budget -- at least for the short term, Kendall said. "But we're
still sitting here with the Sword of Damocles hanging over our heads," he added.
Sequestration will return in fiscal year 2016 if Congress
doesn’t act, the undersecretary said, noting that it was never actually intended
to happen in the first place. “The idea of sequestration was that it would be so
horrible that this [congressional] committee would feel compelled to come out
with an agreement,” Kendall said.
Sequestration generally was expected to be in place for two
to three months, he said. "It was not intended to be a budget-cutting mechanism,"
the undersecretary noted. "There's a perception that the department cried wolf
about sequestration,” Kendall said. “I was very vocal in my confirmation hearing
for undersecretary. I said some strong things about the implications of
sequestration. I believe they were accurate.”
But, he said, “the cuts of sequestration were so widely
distributed that there were no dramatic, immediate events that got everybody's
Instead, it became death by a thousand cuts, the
undersecretary said. “The biggest single impact was probably on readiness -- on
the readiness of our forces, on their training, on their ability to maintain
their equipment, on the logistics side of our business, basically. “That was not
highly visible,” he continued. “The fact that people couldn't go out and do
training, the fact that people did not have parts … was not highly visible.”
And now sequestration is grimly accepted as the status quo,
Kendall said, reiterating that it never was intended to be that way.
The Defense Department has looked at what it will be like if
sequestration were to continue, he said. "It's pretty unpleasant,” the
undersecretary told the conference audience, adding that it puts the department
at a level of funding that will not allow it to execute the president’s defense
"We're trying to figure out how to manage our way through this,” Kendall said.
“One of the greatest problems with the sequestration mechanism and the
uncertainty we face is … we can't plan."
The department has tried to act as if the uncertainty will go
away, he said, but the problem with that is sequestration is a 10-year law. “It
doesn't go away unless Congress does something to take it away, and I don't see
any political prospect of that any time soon,” he said. “Whatever happens in the
election coming up, I think we're going to be in the same position. … Meanwhile,
we have to live our lives and do our jobs in this environment."
So, he said, the department has to learn to manage its way
through the uncertainty, probably for an indefinite period of time. But
recognizing this fact allows the department to plan for the risk of receiving a
lower budget than it requested, the undersecretary said.
Kendall said several things in the current fiscal environment worry him:
-- The potential for creating a hollow force by underfunding training and
-- Cuts to funding for modernization and research and development;
-- The health of the civilian workforce; and
-- The health of the industrial base -- from top to bottom, products to
To mitigate these risks, the initiatives outlined in Better
Buying Power 2.0 are where the department can look to save the most money,
Kendall said. “Should-cost” is a fundamental initiative, he said, "and it's
tightly coupled to the desire to change our culture a little bit."
The existing culture is one focused on spending all of the money in a project
budget, Kendall said. "We're trying to change that to where it's a culture of
cost control, where your job is to control your costs … to get as much as you
can for the money you've been given -- improve your productivity, in other words."
Going hand in hand with controlling costs is avoiding
spending money when it doesn't need to be spent, the undersecretary said. "There
are always higher-priority needs, so if you have funds that have been
appropriated that we can use for something that's a higher priority, that's a
good thing," he said.
Should-cost is about actively driving costs down, Kendall added. "It's about the
idea that you don't just stay within your budget, because you understand your
costs -- understand them deeply, look for opportunities to reduce your costs,
and then act on that."
A second initiative is aimed at eliminating redundancy, he
said. One way to do that is through commonality of parts, the undersecretary
said. "We need to do a better job at that," he acknowledged.
Performance-based logistics will help to define performance
in a way that's relevant to the operational community and then reward people for
doing a better job, Kendall said. In part, he added, this can be done by using
contract types that are appropriate to the project and properly written.
"Industry is very simple. It will respond to the incentives," the undersecretary
The need to remove layers of bureaucracy transcends the
logistics community, Kendall said. "Bureaucracies tend to grow," he said. "In a
bureaucracy, people tend to generate work for each other that may or may not
have real value."
Effective competition across the board is absolutely the best
way for the department to reduce costs, the undersecretary said.
While reduced budgets mean the department is doing fewer "new
things," he continued, contractors shouldn't be complacent or comfortable that
they've got the business forever. "We're not going to get the kind of leanness
and efficiency that we need if people have that attitude," he said.
The immediate future isn't going to be any less stressful, Kendall said. "I
don't predict an easy time,” he said. I think this is a temporary situation,
He noted that defense budgets are cyclical. "We're in a
downturn right now,” he said. “It'll end, and we'll go back up."
(Follow Claudette Roulo on
Twitter @rouloafps) :
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