Affordability–the new watchword

Affordability–the new watchword

Posted on January 30th, 2012 in Blog, News, Services, Top Picks

On the heels of the new strategy, DoD has now released a white paper on what the programmatic implications are, and a condensed Programmatic Decisions List. The actions are extensive and represent real cuts to force structure and formerly projected acquisitions.

However, many decisions with major fiscal implications are deferred, fudged or ignored, for now. No reduction in large deck aircraft carriers. Committment to all three F-35 variants, for now. Commitment to all three legs of the nuclear Triad…pending an ongoing review. And the elephant in the room: no provisions at all to deal with the potential Budget Control Act sequestration less than a year from now.

The situation calls for “bold fiscal leadership.” But the prospects of that,e specially in an election year, are dim. Paul McLeary and Bill Sweetman offer some good insights (Situation Normal…) into just what that means–largely, no timely action by Congress, and increasing budgetary pressure on DoD programs. This will drive, as McLeary and Sweetman point out, new approaches to procurement. It’s also likely to place a premium on programs that are “affordable.” Whereas ten years ago DoD sought transformational capabilities, and 5 years ago that shifted to doing whatever it took to “win the war we’re in,” the new era–regardless of the fate of sequestration–demands capabilities that DoD can actually buy.

Exactly how extensive the impact will be isn’t clear yet–that depends on whether Congress can get its act together, whether DoD can rein in escalating personnel costs, whether the Pentagon will line up behind a new strategy that does not attempt to do everything, and other significant “ifs.” It’s also not clear if the Pentagon is serious about changing some of its acquisition habits and incentives, and whether industry in turn can deliver smaller quantities at reasonable unit quantities. But the need is clear–DoD needs to be able to develop and purchase hardware (whether it flies, floats, crawls or beeps) and software in new ways. Will it embrace more COTS technology? Continue a trend toward service/indefinite-delivery-indefinite-quantity/task order contracts? Or is there a new way to enhance affordability? The Pentagon will be looking for ideas, and there may yet be opportunities in a dismal budget environment for companies that can deliver.