WASHINGTON, Sept 14 (Reuters) - The U.S. Defense Department unveiled a series of 23 detailed steps on Tuesday aimed at cutting waste in weapons programs and avoiding cost overruns that have plagued the Pentagon for years.
The measures will affect about $400 billion of the Pentagon's total annual spending of $700 billion, touching all major defense companies, including Lockheed Martin Corp , Boeing Co, Northrop Grumman Corp, General Dynamics Corp and Raytheon Co.
According to a Defense Department statement, the changes include plans to:
* Mandate affordability as a requirement for new weapons programs, looking carefully at ways to make systems less expensive without losing important capabilities.
* Eliminate redundant programs, with an initial focus on ground moving target system, and missile defense.
* Make production rates economical and hold them stable.
* Set shorter timelines for weapons programs, with any changes needing approval as part of affordability reviews.
* Reward contractors for improved productivity, with program managers to explain reward and incentive strategies as part of their acquisition plans.
* Increase use of fixed price, incentive fee type contracts, using a 50/50 share line for overruns or savings, and a 120-percent ceiling.
* Extend the Navy's 'preferred supplier' pilot program across the department, giving special terms and conditions to companies that have demonstrated superior performance.
* Reinvigorate industry's independent research efforts by removing impediments to innovate and give better feedback to industry researchers.
* Promote real competition, removing current obstacles wherever possible, and negotiating even with single bid offers on the basis of a cost and price analysis,
* Increase role of non-traditional suppliers and small businesses.
* Tackle big problems in how Pentagon buys services, including requiring all service contracts of over $1 billion to meet cost efficiency objectives.
* Cut red tape and bureaucracy in the Pentagon, including working with Congress to cut requirements that don't add value.
* Cut rising number of Pentagon program reviews to those needed for major investment decisions.
* Cut by half the volume and cost of internal and congressional reports, which are time-consuming and costly to produce but often remove focus on executing programs.
* Align auditing processes by the Pentagon's Defense Contract Management Agency and Defense Contract Audit Agency to ensure their work is complementary, not duplicative.
(Reporting by Andrea Shalal-Esa; Editing by Bernard Orr) Keywords: PENTAGON COSTS/ (andrea.shalal-esa@thomsonreuters.com; + 1 202 354 5807; Reuters Messaging: andrea.shalal-esa.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The measures will affect about $400 billion of the Pentagon's total annual spending of $700 billion, touching all major defense companies, including Lockheed Martin Corp , Boeing Co, Northrop Grumman Corp, General Dynamics Corp and Raytheon Co.
According to a Defense Department statement, the changes include plans to:
* Mandate affordability as a requirement for new weapons programs, looking carefully at ways to make systems less expensive without losing important capabilities.
* Eliminate redundant programs, with an initial focus on ground moving target system, and missile defense.
* Make production rates economical and hold them stable.
* Set shorter timelines for weapons programs, with any changes needing approval as part of affordability reviews.
* Reward contractors for improved productivity, with program managers to explain reward and incentive strategies as part of their acquisition plans.
* Increase use of fixed price, incentive fee type contracts, using a 50/50 share line for overruns or savings, and a 120-percent ceiling.
* Extend the Navy's 'preferred supplier' pilot program across the department, giving special terms and conditions to companies that have demonstrated superior performance.
* Reinvigorate industry's independent research efforts by removing impediments to innovate and give better feedback to industry researchers.
* Promote real competition, removing current obstacles wherever possible, and negotiating even with single bid offers on the basis of a cost and price analysis,
* Increase role of non-traditional suppliers and small businesses.
* Tackle big problems in how Pentagon buys services, including requiring all service contracts of over $1 billion to meet cost efficiency objectives.
* Cut red tape and bureaucracy in the Pentagon, including working with Congress to cut requirements that don't add value.
* Cut rising number of Pentagon program reviews to those needed for major investment decisions.
* Cut by half the volume and cost of internal and congressional reports, which are time-consuming and costly to produce but often remove focus on executing programs.
* Align auditing processes by the Pentagon's Defense Contract Management Agency and Defense Contract Audit Agency to ensure their work is complementary, not duplicative.
(Reporting by Andrea Shalal-Esa; Editing by Bernard Orr) Keywords: PENTAGON COSTS/ (andrea.shalal-esa@thomsonreuters.com; + 1 202 354 5807; Reuters Messaging: andrea.shalal-esa.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.